| □ | Preliminary Proxy Statement |
| □ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ | Definitive Proxy Statement |
| □ | Definitive Additional Materials |
| □ | Soliciting Material Pursuant to § 240.14a-12 |
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□
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No fee required.
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☒
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1.
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Title of each class of securities to which transaction applies:
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Commonstock,parvalue$0.01pershare,ofWestinghouseAirBrakeTechnologiesCorporation
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2.
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Aggregate number of securities to which transaction applies:
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98,480,083 (represents an estimate of the maximum number of shares of common stock of Westinghouse Air Brake Technologies Corporation (‘‘Wabtec’’) issuable upon completion of the transactions contemplated by the Agreement and Plan of Merger dated as of May 20, 2018, among General Electric Company, Transportation Systems Holdings Inc. (‘‘SpinCo’’), Wabtec and Wabtec US Rail Holdings, Inc. (the ‘‘Merger Agreement’’), as described in this proxy statement).
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3.
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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$109.31(calculatedinaccordancewithRule0-11(c)(1)(i) and 0-11(a)(4) under the Securities Exchange Act of 1934, as amended, based on the average of the high and low prices of shares of common stock of Wabtec, into which shares of common stock of SpinCo will be converted, as reported on the New York Stock Exchange on August 1, 2018).
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4.
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Proposedmaximumaggregatevalueoftransaction:$10,764,857,873
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Calculated pursuant to Rule 0-11(c)(1)(i) and 0-11(a)(4) under the Securities Exchange Act of 1934, as amended, based on the average of the high and low prices of shares of common stock of Wabtec, into which shares of common stock of SpinCo will be converted, as reported on the New York Stock Exchange on August 1, 2018 and based on the expected merger exchange ratio.
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5.
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Totalfeepaid:$1,340,225
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Calculated pursuant to Section 14(g) of the Securities Exchange Act of 1934, as amended, and Rule 0-11(c)(1)(i) thereunder, by multiplying$10,764,857,873by0.0001245.
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☒
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Fee paid previously with preliminary materials.
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□
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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1.
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Amount previously paid:
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2.
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Form, Schedule or Registration Statement No.:
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3.
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Filing party:
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4.
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Date Filed:
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| 1. | authorize the issuance of shares of Wabtec common stock in the Merger (the ‘‘Share Issuance’’); |
| 2. | amend Wabtec’s Restated Certificate of Incorporation dated January 30, 1995, as amended December 31, 2003 and May 14, 2013 (the ‘‘Wabtec Charter’’), to increase the number of authorized shares of common stock from 200 million to 500 million (the ‘‘Wabtec Charter Amendment’’); and |
| 3. | if it is determined by the board of directors to be necessary or appropriate, approve adjournments or postponements of the special meeting to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Share Issuance and the Wabtec Charter Amendment. |
| 1. | ‘‘FOR’’ the authorization of the issuance of shares of Wabtec common stock in the Merger (the ‘‘Share Issuance’’); |
| 2. | ‘‘FOR’’ the amendment to Wabtec’s Restated Certificate of Incorporation dated January 30, 1995, as amended December 31, 2003 and May 14, 2013, to increase the number of authorized shares of common stock from 200 million to 500 million (the ‘‘Wabtec Charter Amendment’’); and |
| 3. | If it is determined by the board of directors to be necessary or appropriate, ‘‘FOR’’ the approval of adjournments or postponements of the special meeting to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Share Issuance and the Wabtec Charter Amendment. |
| • | November 14, 2018 |
| • | 9:00 a.m. Eastern time |
| • | The Duquesne Club, 325 Sixth Avenue, Pittsburgh, Pennsylvania 15222 |
| • | Authorize the issuance of shares of Wabtec common stock in the Merger (the ‘‘Share Issuance’’). |
| • | Amend Wabtec’s Restated Certificate of Incorporation dated January 30, 1995, as amended December 31, 2003 and May 14, 2013 (the ‘‘Wabtec Charter’’), to increase the number of authorized shares of common stock from 200 million to 500 million (the ‘‘Wabtec Charter Amendment’’). |
| • | If it is determined by the board of directors to be necessary or appropriate, approve adjournments or postponements of the special meeting to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Share Issuance and the Wabtec Charter Amendment. |
| • | If you own stock directly, please vote by Internet, by telephone or by completing, signing and dating the enclosed proxy card for the special meeting and mailing the proxy card in the enclosed envelope. |
| • | If you own stock through a bank, stockbroker or trustee, please vote by following the instructions included in the material that you receive from your bank, stockbroker or trustee. |
| • | Only stockholders of record on October 11, 2018 will receive notice of and may vote at the special meeting. |
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VIA THE INTERNET
Go to the website address on your proxy card or voting instruction form and follow the instructions. |
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BY MAIL
Sign, date and return your proxy card or voting instruction form in the enclosed envelope. |
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BY TELEPHONE
Call the toll-free number on your proxy card or voting instruction form and follow the instructions for telephone voting shown on your proxy card or voting instruction form. |
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IN PERSON
Attend the special meeting in Pittsburgh, Pennsylvania. |
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Helpful Information
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References to Additional Information
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Questions and Answers About the Special Meeting and the Transactions
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Summary
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The Companies
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The Transactions
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Summary Historical, Pro Forma and Supplemental Financial Data
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Summary Historical Combined Financial Data of GE Transportation
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Summary Historical Consolidated Financial Data of Wabtec
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Summary Unaudited Pro Forma Condensed Combined Financial Data
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Summary Comparative Historical and Pro Forma Per Share Data
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Historical Common Stock Market Price and Dividend Data
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Wabtec Dividend Policy
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The Transactions
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Determination of Number of Shares of SpinCo Common Stock to Be Distributed to GE Stockholders
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Background of the Transactions
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Wabtec’s Reasons for the Transactions
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Opinion of Wabtec’s Financial Advisor
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Certain Unaudited Financial Projections
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Material U.S. Federal Income Tax Consequences of the Distribution, the Merger and the Direct Sale
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Wabtec Stockholders Meeting
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Interests of GE’s and SpinCo’s Directors and Executive Officers in the Transactions
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Interests of Wabtec’s Directors and Executive Officers in the Transactions
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Accounting Treatment and Considerations
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Regulatory Approvals
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Federal Securities Law Consequences; Resale Restriction
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No Appraisal or Dissenters’ Rights
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The Merger Agreement
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The Merger
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Closing; Effective Time
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Merger Consideration
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Distribution of Per Share Merger Consideration
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Distributions With Respect to Shares of Wabtec Common Stock after the Effective Time of the Merger
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Termination of the Exchange Fund; No Liability
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Withholding Rights
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Stock Transfer Books
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Post-Closing Wabtec Board of Directors and Officers
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Stockholders Meeting
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Representations and Warranties
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Conduct of Business Pending the Merger
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Tax Matters
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SEC Filings
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Regulatory Matters
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No Solicitation
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Board Recommendation
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Financing
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Certain Other Covenants and Agreements
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Conditions to the Merger
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Termination
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Termination Fee and Expenses
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Specific Performance
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Amendments; Waivers
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The Separation Agreement
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Overview
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Separation of GE Transportation
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Issuance of SpinCo Common Stock
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Distribution
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Conditions to the Distribution and the Direct Sale
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Disclaimer
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Mutual Release; Indemnification; Limitation of Liability
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Further Assurances and Certain Additional Covenants
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Termination
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Assignment
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Amendment and Waiver
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Debt Financing
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Overview
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The Credit Agreement
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The New Wabtec Notes
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Other Agreements
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Voting Agreement
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Shareholders Agreement
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Employee Matters Agreement
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Tax Matters Agreement
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IP Cross License Agreement
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Trademark License Agreement
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Transition Services Agreement
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Additional Agreements
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Description of Wabtec Capital Securities
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General
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Common Stock
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Preferred Stock
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Special Charter Provisions
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Risk Factors
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Risks Related to the Transactions
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Risks Related to Wabtec, Including GE Transportation, After the Transactions
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Cautionary Statement on Forward-Looking Statements
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Certain Relationships and Related Transactions
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The Transaction—Interests of Wabtec’s Directors and Executive Officers in the Transaction
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Interests of Wabtec’s Directors in the Transaction
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Interests of Wabtec’s Executive Officers in the Transaction
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Information About the Wabtec Special Meeting
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General; Date; Time and Place; Purposes of the Meeting
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Record Date; Quorum; Voting Information; Required Votes
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Recommendation of Board of Directors
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How to Vote; Revocation of Proxies
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Solicitation of Proxies
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Adjournments and Postponements
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Attending the Meeting
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Questions and Additional Information
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Information on Wabtec
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Overview
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Wabtec’s Business After the Consummation of the Transactions
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Wabtec’s Liquidity and Capital Resources After the Consummation of the Transactions
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Directors and Officers of Wabtec Before and After the Consummation of the Transactions
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Information on GE Transportation
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Overview
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GE Transportation’s Solutions
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GE Transportation’s Business Transformation
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GE Transportation’s Competitive Strengths
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Geographies
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Raw Materials and Suppliers
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Customers
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Competition
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Employees
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Regulation
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Effects of Seasonality
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Environmental and Regulatory Matters
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Principal Properties
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Intellectual Property
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Legal Proceedings
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Management’s Discussion and Analysis of Financial Condition and Results of Operations for GE Transportation
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Overview
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Factors Impacting GE Transportation’s Performance
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Presentation
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Results of Operations
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Cash Flows
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Indebtedness
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Off Balance Sheet Obligations
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Contractual Obligations, Commitments and Contingencies
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Quantitative and Qualitative Disclosure About Market Risk
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Critical Accounting Estimates
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Recent Accounting Pronouncements
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Selected Historical Financial Data
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Selected Historical Combined Financial Data of GE Transportation
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Selected Historical Consolidated Financial Data of Wabtec
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Unaudited Pro Forma Condensed Combined Financial Statements
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Proposal 1—Approval of Issuance of Wabtec Common Stock
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Proposal 2—Approval of Increase in Authorized Common Stock
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Proposal 3—Adjournment
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Stockholder Proposals For 2019 Annual Meeting
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Other Information
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Stock Ownership of Certain Beneficial Owners
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Stock Ownership of Directors and Officers
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Section 16(a) Beneficial Ownership Reporting Compliance
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Annual Report on Form 10-K
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Certain Definitions
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Where You Can Find More Information; Incorporation by Reference
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Index to Financial Pages
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F-1
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Annexes
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The Merger Agreement
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The Separation Agreement
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The Voting Agreement
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Form of the Shareholders Agreement
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Form of the Employee Matters Agreement
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Form of the Tax Matters Agreement
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Opinion of Goldman Sachs.
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| 1. | To authorize the issuance of shares of Wabtec common stock in the Merger (the ‘‘Share Issuance’’). |
| 2. | To amend the Wabtec Charter to increase the number of authorized shares of common stock from 200 million to 500 million (the ‘‘Wabtec Charter Amendment’’). |
| 3. | If it is determined by the board of directors to be necessary or appropriate, to approve adjournments or postponements of the special meeting to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Share Issuance and the Wabtec Charter Amendment. |
| • | Vote by Internet, by going to the website address on your proxy card or voting instruction form and following the instructions for Internet voting shown on the website. |
| • | Vote by Telephone, by dialing the toll-free number on your proxy card or voting instruction form and following the instructions for telephone voting shown on the proxy card or voting instruction form. |
| • | Vote by Proxy Card, by completing, signing, dating and mailing a proxy card or voting instruction form in the envelope provided. |
| • | Attached to your proxy card; |
| • | Can be printed from the online voting site; or |
| • | A letter or a recent account statement showing your ownership of Wabtec common stock as of the record date, if you hold shares through a bank, broker or other nominee. |
| • | by sending a signed notice of revocation to the Secretary of Wabtec at 1001 Air Brake Avenue, Wilmerding, PA 15148, that is received prior to 11:59 p.m. Eastern time on November 13, 2018, stating that the Wabtec stockholder revokes its proxy; |
| • | by properly completing a new proxy card bearing a later date and properly submitting it so that it is received prior to the special meeting; |
| • | by logging onto the Internet website specified on the proxy card in the same manner a stockholder would to submit its proxy electronically or by calling the toll-free number specified on the proxy card, in each case, prior to 11:59 p.m. Eastern time on November 13, 2018, and in each case if the Wabtec stockholder is eligible to do so and following the instructions on the proxy card; or |
| • | by attending the special meeting and voting in person. |
| • | GE will conduct the Internal Reorganization. |
| • | Certain assets of GE Transportation will be sold by GE to Direct Sale Purchaser for a cash payment of $2.9 billion (the ‘‘Direct Sale Purchase Price’’). Direct Sale Purchaser will assume certain liabilities of GE Transportation in connection with this purchase. Wabtec and the other Borrowers entered into the Credit Agreement on June 8, 2018, which includes (i) a $1.2 billion unsecured revolving credit facility (the ‘‘Revolving Credit Facility’’), which replaced Wabtec’s previous revolving credit facility, (ii) a $350.0 million refinancing term loan (the ‘‘Refinancing Term Loan’’), which refinanced Wabtec’s previous term loan, and (iii) a $400.0 million delayed draw term loan (the ‘‘Delayed Draw Term Loan’’). Wabtec also obtained commitments (the ‘‘Bridge Commitments’’) in respect of a bridge loan facility (the ‘‘Bridge Loan Facility’’) in an amount not to exceed $2.5 billion. On September 14, 2018, in accordance with the Commitment Letter, the Bridge Commitments were permanently reduced to $0 |
| • | GE and its subsidiaries will transfer the SpinCo Business to SpinCo and its subsidiaries (to the extent not already held by SpinCo and its subsidiaries) in the SpinCo Transfer. |
| • | In connection with the SpinCo Transfer, SpinCo will issue to GE additional shares of SpinCo common stock. Following this issuance of additional shares to GE, GE will own 8,700,000,000 shares of SpinCo common stock, or such other amount as GE shall determine with Wabtec’s consent, which will constitute all of the outstanding stock of SpinCo. |
| • | GE will effect the Distribution by distributing on a pro rata basis all of the Distribution Shares to GE stockholders as of the record date for the Distribution. GE will deliver the Distribution Shares to the exchange agent, who will hold such shares for the benefit of GE stockholders. GE has the option, however, to effect the Distribution pursuant to a split-off. In the event GE elects to effect the Distribution pursuant to a split-off, GE would offer to holders of GE common stock the right to exchange all or a portion of their GE common stock for a number of Distribution Shares (which, in the aggregate, may be less than all of the Distribution Shares) at a discount to the implied value of the SpinCo common stock (based on the per-share value of Wabtec common stock multiplied by the exchange ratio set forth in the Merger Agreement), subject to proration if the GE stockholders have validly tendered more shares of GE common stock than GE is offering to accept for exchange (the ‘‘GE Exchange Offer’’). In the event the GE Exchange Offer is consummated, GE would distribute the remaining Distribution Shares, if any, on a pro rata basis to GE stockholders whose shares of GE common stock remain outstanding after the consummation of the GE Exchange Offer. |
| • | Immediately after the Distribution, Merger Sub will merge with and into SpinCo, whereby the separate corporate existence of Merger Sub will cease and SpinCo will continue as the surviving company and as a wholly owned subsidiary of Wabtec. In the Merger, each share of SpinCo common stock will be converted into the right to receive a number of shares of Wabtec common stock based on the exchange ratio set forth in the Merger Agreement, as described in the section of this proxy statement entitled ‘‘The Merger Agreement—Merger Consideration.’’ Upon consummation of the Merger and calculated based on Wabtec’s outstanding common stock immediately prior to the Merger on a fully-diluted, as-converted and as-exercised basis, 50.1% of the outstanding shares of Wabtec common stock would be held collectively by GE and pre-Merger holders of GE common stock (with approximately 9.9% of the outstanding shares of Wabtec common stock expected to be held by GE) and 49.9% of the outstanding shares of Wabtec common stock would be held by pre-Merger Wabtec stockholders. The shares held by GE will be subject to GE’s obligations under (x) the Tax Matters Agreement to sell a number of shares of Wabtec common stock within two years of the Distribution Date (as described in the section of this proxy statement entitled ‘‘Other Agreements—Tax Matters Agreement’’) and (y) the Shareholders Agreement to sell, subject to limited exceptions, all of the shares of Wabtec common stock GE beneficially owns within three years of the closing date of the Merger and prior thereto, to vote all of such shares in the proportion required under the Shareholders Agreement (as described in the section of this proxy statement entitled ‘‘Other Agreements—Shareholders Agreement’’). |
| • | the approval by Wabtec stockholders of the Share Issuance; |
| • | the approval by Wabtec stockholders of the Wabtec Charter Amendment; |
| • | the termination or expiration of the applicable waiting period under the HSR Act; |
| • | the taking, making or obtaining of all material actions by, consents or approvals of, or in respect of or filings with any governmental authority required to permit the Transactions; |
| • | the effectiveness under the Securities Act of SpinCo’s registration statement on Form 10 or such Form(s) as shall be required under applicable SEC rules and Wabtec’s registration statement on Form S-4, and the absence of any stop order issued by the SEC or any pending proceeding before the SEC seeking a stop order with respect thereto; |
| • | the receipt of the GE Tax Opinions and the Wabtec Tax Opinion by GE and Wabtec, respectively; |
| • | the receipt of the Direct Sale Purchase Price by GE; |
| • | the completion of the various transaction steps contemplated by the Merger Agreement and the Separation Agreement, including the International Reorganization, the Direct Sale, the SpinCo Transfer and the Distribution; and |
| • | other customary conditions. |
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Six Months Ended June 30,
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Year Ended December 31,
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In thousands
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2018
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2017
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2017
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2016
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2015
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Income Statement Data
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Total revenues
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$1,773,888
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$1,980,585
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$3,930,308
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$4,606,591
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$5,421,479
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Gross profit
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486,597
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418,019
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923,234
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1,171,637
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1,325,936
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Other operating and non-operating expenses(1)
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(274,287)
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(260,936)
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(490,835)
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(464,120)
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(489,037)
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Earnings before income taxes
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212,310
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157,083
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432,399
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707,517
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836,899
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Provision for income taxes
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(44,084)
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(56,984)
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(44,303)
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(167,428)
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(349,275)
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Net earnings
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168,226
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100,099
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388,096
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540,089
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487,624
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Less net earnings attributable to noncontrolling interests
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4,136
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6,811
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14,311
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6,144
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7,547
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Net earnings attributable to GE
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$164,090
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$93,288
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$373,785
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$533,945
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$480,077
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| (1) | Includes selling, general and administrative expenses, impairment of goodwill, non-operating benefit costs and other (expense) income. |
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As of June 30,
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As of December 31,
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In thousands
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2018
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2017
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2016
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Balance Sheet Data
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Total assets
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$3,839,271
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$3,544,573
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$3,626,918
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Cash and cash equivalents
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131,516
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105,338
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151,151
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Total liabilities
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2,008,697
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1,871,350
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2,243,954
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Total equity
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1,830,574
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1,673,223
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1,382,964
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Six Months Ended June 30,
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Year Ended December 31,
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In thousands
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2018
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2017
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2017
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2016
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2015
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Cash provided by (used for):
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|||||
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Operating activities
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$76,436
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$(34,120)
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$322,004
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$853,712
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$875,234
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Investing activities
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(68,393)
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(143,973)
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(200,956)
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(168,214)
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(225,875)
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Financing activities
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20,548
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229,226
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(171,062)
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(625,586)
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(622,770)
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|
Six Months Ended June 30,
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Year Ended December 31,
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In thousands, except per share data
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2018
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2017
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2017
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2016
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2015
|
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Income Statement Data
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|||||
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Net Sales
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$2,167,857
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$1,848,287
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$3,881,756
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$2,931,188
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$3,307,998
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Gross profit
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634,848
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543,670
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1,065,313
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924,239
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1,047,816
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Operating expenses
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(380,046)
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(315,801)
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(644,234)
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(467,632)
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(438,962)
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Income from operations
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254,802
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227,869
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421,079
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456,607
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608,854
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Interest expense, net
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(52,204)
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(37,422)
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(77,884)
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(50,298)
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(27,254)
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Other (expenses) income, net
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4,757
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5,747
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8,868
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6,528
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3,768
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Net income attributable to Wabtec stockholders
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$172,782
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$145,914
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$262,261
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$304,887
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$398,628
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Diluted Earnings per Common Share
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|||||
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Basic
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|||||
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Net income attributable to Wabtec stockholders per share
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$1.80
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$1.52
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$2.74
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$3.37
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$4.14
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Diluted
|
|||||
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Net income attributable to Wabtec stockholders per share
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$1.79
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$1.52
|
$2.72
|
$3.34
|
$4.10
|
|
Cash dividends declared per share
|
$0.24
|
$0.20
|
$0.44
|
$0.36
|
$0.28
|
|
Weighted average shares outstanding
|
|||||
|
Basic
|
95,867
|
95,370
|
95,453
|
90,359
|
96,074
|
|
Diluted
|
96,471
|
96,071
|
96,125
|
91,141
|
97,006
|
|
As of June 30,
|
As of December 31,
|
||
|
In thousands
|
2018
|
2017
|
2016
|
|
Balance Sheet Data
|
|||
|
Total assets
|
$6,677,606
|
$6,579,980
|
$6,581,018
|
|
Cash and cash equivalents
|
245,574
|
233,401
|
398,484
|
|
Total debt
|
1,884,921
|
1,870,528
|
1,892,776
|
|
Total equity
|
2,874,628
|
2,828,532
|
2,976,825
|
|
Six Months Ended June 30,
|
Year Ended December 31,
|
||||
|
In thousands
|
2018
|
2017
|
2017
|
2016
|
2015
|
|
Cash provided by (used for):
|
|||||
|
Operating activities
|
$67,904
|
$(13,703)
|
$188,811
|
$450,530
|
$450,844
|
|
Investing activities
|
(69,100)
|
(884,629)
|
(1,033,474)
|
(232,966)
|
(177,194)
|
|
Financing activities
|
22,764
|
41,590
|
(97,431)
|
522,971
|
(251,498)
|
|
In millions, except per share data
(in U.S. dollars unless otherwise indicated) |
Wabtec
Historical |
GE Transportation
Historical |
Reclassification
Adjustments |
Pro Forma
Adjustments |
Pro Forma
Combined Wabtec/GE Transportation |
|
Sales of goods
|
$2,167.9
|
$1,101.8
|
$(91.3)
|
$(29.2)
|
$3,149.2
|
|
Sales of services
|
—
|
672.1
|
91.3
|
(58.0)
|
705.4
|
|
Net sales
|
2,167.9
|
1,773.9
|
—
|
(87.2)
|
3,854.6
|
|
Cost of goods sold
|
(1,533.0)
|
(881.3)
|
153.1
|
19.6
|
(2,241.6)
|
|
Cost of services sold
|
—
|
(406.0)
|
(73.9)
|
(3.1)
|
(483.0)
|
|
Gross profit
|
634.8
|
486.6
|
79.2
|
(70.7)
|
1,129.9
|
|
Income from operations before income taxes
|
207.4
|
212.3
|
—
|
(161.5)
|
258.2
|
|
Income tax expense
|
(36.6)
|
(44.1)
|
—
|
36.2
|
(44.5)
|
|
Net income
|
170.7
|
168.2
|
—
|
(125.3)
|
213.6
|
|
Less: Net income attributable to noncontrolling interest
|
2.1
|
(4.1)
|
—
|
—
|
(2.0)
|
|
Net income attributable to Wabtec stockholders
|
$172.8
|
$164.1
|
$—
|
$(125.3)
|
$211.6
|
|
In millions, except per share data
(in U.S. dollars unless otherwise indicated) |
Wabtec
Historical |
GE
Transportation Historical |
Reclassification
Adjustments |
Pro Forma
Adjustments |
Pro Forma
Combined Wabtec/GE Transportation |
|
Sales of goods
|
$3,881.8
|
$2,546.6
|
$(196.1)
|
$(73.8)
|
$6,158.5
|
|
Sales of services
|
—
|
1,383.7
|
196.1
|
(78.9)
|
1,500.9
|
|
Net sales
|
3,881.8
|
3,930.3
|
—
|
(152.7)
|
7,659.4
|
|
Cost of goods sold
|
(2,816.4)
|
(2,129.7)
|
319.0
|
52.5
|
(4,574.6)
|
|
Cost of services sold
|
—
|
(877.4)
|
(149.4)
|
(4.4)
|
(1,031.2)
|
|
Gross profit
|
1,065.3
|
923.2
|
169.6
|
(104.6)
|
2,053.5
|
|
Income from operations before income taxes
|
352.2
|
432.4
|
—
|
(385.9)
|
398.7
|
|
Income tax expense
|
(89.8)
|
(44.3)
|
—
|
113.8
|
(20.3)
|
|
Net income
|
262.4
|
388.1
|
—
|
(272.1)
|
378.4
|
|
Less: Net income attributable to noncontrolling interest
|
—
|
(14.3)
|
—
|
—
|
(14.3)
|
|
Net income attributable to Wabtec stockholders
|
$262.4
|
$373.8
|
$—
|
$(272.1)
|
$364.1
|
|
In millions
(in U.S. dollars unless otherwise indicated) |
Wabtec
Historical |
GE
Transportation Historical |
Reclassification
Adjustments |
Pro Forma
Adjustments |
Pro Forma
Combined Wabtec/GE Transportation |
|
Assets
|
|||||
|
Cash and cash equivalents
|
$ 245.6
|
$131.5
|
$—
|
$ (127.2)
|
$249.9
|
|
Total assets
|
6,677.6
|
3,839.3
|
—
|
11,897.5
|
22,414.4
|
|
Liabilities and Shareholders’ Equity
|
|||||
|
Long-term debt
|
1,857.8
|
67.5
|
—
|
2,810.7
|
4,736.0
|
|
Total liabilities
|
3,803.0
|
2,008.7
|
—
|
2,891.4
|
8,703.1
|
|
Total shareholders’ equity
|
2,857.3
|
1,785.9
|
—
|
9,006.1
|
13,649.3
|
|
As of and for the
Six Months Ended June 30, 2018 |
As of and for the
Year Ended December 31, 2017 |
|||
|
In thousands, except per share data
|
Wabtec
Historical |
Pro Forma
Combined |
Wabtec
Historical |
Pro Forma
Combined |
|
Diluted Earnings per Common Share
|
||||
|
Basic
|
||||
|
Net income attributable to Wabtec stockholders
|
$1.80
|
$1.09
|
$2.74
|
$1.87
|
|
Diluted
|
||||
|
Net income attributable to Wabtec stockholders
|
$1.79
|
$1.08
|
$2.72
|
$1.87
|
|
Weighted average shares outstanding
|
||||
|
Basic
|
95,867
|
194,347
|
95,453
|
193,933
|
|
Diluted
|
96,471
|
194,951
|
96,125
|
194,605
|
|
Wabtec Common Stock
|
|||
|
High
|
Low
|
Dividend
|
|
|
2018
|
|||
|
First Quarter
|
$86.24
|
$69.75
|
$0.120
|
|
Second Quarter
|
$104.21
|
$78.80
|
$0.120
|
|
Third Quarter
|
$115.40
|
$96.56
|
$0.120
|
|
Fourth Quarter (through October 11, 2018)
|
$107.02
|
$96.77
|
$ N/A
|
|
2017
|
|||
|
First Quarter
|
$88.87
|
$74.06
|
$0.100
|
|
Second Quarter
|
$92.00
|
$77.09
|
$0.100
|
|
Third Quarter
|
$93.81
|
$69.20
|
$0.120
|
|
Fourth Quarter
|
$82.13
|
$71.96
|
$0.120
|
|
2016
|
|||
|
First Quarter
|
$80.61
|
$60.28
|
$0.080
|
|
Second Quarter
|
$88.46
|
$66.14
|
$0.080
|
|
Third Quarter
|
$82.00
|
$65.54
|
$0.100
|
|
Fourth Quarter
|
$89.18
|
$74.32
|
$0.100
|
| • | the portion of Wabtec common stock to be owned by GE and GE stockholders following the consummation of the Transactions; |
| • | the terms of the cash and debt purchase price adjustments; |
| • | the pro forma leverage and indebtedness of the combined company; |
| • | the allocation of certain liabilities of GE Transportation; |
| • | the amount of the cash payment to GE of $2.9 billion, in line with the $2.9 billion–$3.0 billion amount reflected in the March 2018 nonbinding term sheet; |
| • | the parties’ decision that it would be in their mutual interests to pursue the Direct Sale rather than having SpinCo incur debt and distribute an exit dividend to GE, because the modified Reverse Morris Trust structure should result in tax benefits to Wabtec (including by avoiding certain ambiguities under the depreciation rules in U.S. federal income tax law that otherwise might be relevant), which will be shared between the parties (up to a cap) as realized by Wabtec after the Merger. The Direct Sale also should reduce administrative complexity and financing costs; |
| • | provisions relating to the composition of the Wabtec Board following the closing of the Transactions; |
| • | provisions relating to closing certainty, including obligations to seek antitrust approvals, termination fees and certain closing conditions; |
| • | the terms of the tax matters agreement, including terms governing payments to be made to GE in respect of certain tax benefits expected to be realized by the combined company as a result of the Transactions; |
| • | obligations of various Wabtec parties to support the Transactions; and |
| • | GE retaining a portion of the interest in SpinCo rather than distributing it to GE stockholders and the terms of the Shareholders Agreement that would apply in respect of GE’s ownership of Wabtec shares that would be issued in the Merger in respect of that retained interest. |
| • | The combined company is expected to be a diversified global leader in the transportation and logistics business with pro forma 2017 combined revenues of $8 billion; |
| • | the combined company is expected to be better positioned to meet anticipated growth in demand for train intelligence and network optimization products; and |
| • | Wabtec’s and GE Transportation’s respective businesses are believed to be complementary with a large, global installed customer base. It is anticipated that the combined company will have the ability to provide customers with more desirable and affordable solutions and aftermarket services in rapidly evolving categories than the two companies would have separately. |
| • | Wabtec believes that the combination will occur at an attractive time in the railway industry cycle and expects significant growth in revenue and adjusted EBITDA as the cycle rebounds from trough levels; |
| • | the Transactions are expected to be accretive to cash earnings per share beginning in the first full year after the closing of the Transactions; |
| • | Wabtec expects to realize $250 million total run-rate operating synergies, driven by cost and revenue opportunities, within four years after the closing of the Transactions; |
| • | the step-up in tax basis associated with the Transactions is expected by Wabtec to result in average annual cash tax benefits for 15 years of $150.0 million, with the first $470.0 million of cumulative cash benefits to be paid to GE and the remainder (which Wabtec estimated at a net present value of $1.1 billion) to accrue to the combined company; |
| • | the combined company has forecasted future cash flows which Wabtec expects will allow for rapid deleveraging after the closing of the Transactions and enable the combined company to maintain an investment grade debt rating; and |
| • | the Transactions were valued by the Wabtec Board at $11.1 billion based on the Wabtec share price of $83.79 on April 19, 2018—the last unaffected trading day prior to media speculation regarding a potential transaction. When adjusted for the estimated net tax step-up value of $1.1 billion accruing to the combined company, the Transactions were valued by the Wabtec Board at $10.0 billion. The Wabtec Board considered that these valuations were favorable. |
| • | The Transactions, including the aggregate consideration being paid by Wabtec in the Transactions, were the result of extensive arms’-length negotiations between Wabtec and GE; |
| • | the prospective financial results of GE Transportation (as well as the risks involved in achieving those results), the fit of GE Transportation with Wabtec’s previously established strategic goals (which include adding capabilities, expanding customer and geographic access and increasing scale) and the results of Wabtec’s due diligence review of GE Transportation; |
| • | the opinion of Goldman Sachs, dated May 20, 2018, to the Wabtec Board that, as of such date and based upon and subject to the factors and assumptions as set forth in such opinion, the Aggregate Consideration being paid by Wabtec pursuant to the Merger Agreement was fair from a financial point of view to Wabtec, as more fully described in the section of this proxy statement entitled ‘‘The Transactions—Opinion of Wabtec’s Financial Advisor’’; |
| • | the Wabtec Board would be expanded to include three additional directors, each of whom shall be independent as defined in the listing standards of the NYSE, to be designated by GE; |
| • | immediately following the consummation of the Transactions, the current executive officers of Wabtec would continue in their current positions, with additional executive management talent to be gained from former management of GE Transportation and the other changes described in ‘‘Information on Wabtec—Directors and Officers of Wabtec Before and After the Consummation of the Transactions’’; |
| • | the Transactions are expected to be approved by regulatory authorities without significant disruption in the business of Wabtec or GE Transportation; and |
| • | the Merger Agreement permits the Wabtec Board in certain circumstances to withdraw or modify its recommendation that Wabtec stockholders approve the Wabtec Charter Amendment and the Share Issuance, subject to the payment of a termination fee in certain circumstances. |
| • | The inability of Wabtec to influence the operations of GE Transportation during the potentially significant time period prior to consummating the Transactions; |
| • | the possibility that the increased revenues, earnings and efficiencies expected to result from the Transactions would fail to materialize in whole or part; |
| • | the challenges inherent in fully and successfully separating the operations of GE Transportation from GE and integrating such business with Wabtec, especially given that GE Transportation is similar in size and scope to Wabtec’s business; |
| • | the significant, one-time costs expected to be incurred in connection with the Transactions, including approximately $35.0 million of financing-related fees, approximately $60.0 million of transaction-related costs (including advisory, legal, accounting and professional fees) and approximately $88.0 million of transition and integration-related costs (a portion of which will be incremental capital spending), that Wabtec management believes will be necessary to realize the anticipated synergies from the Transactions; |
| • | the potential impact of the restrictions under the Merger Agreement on Wabtec’s ability to take certain actions during the period between execution of the Merger Agreement and the consummation of the Transactions, generally requiring Wabtec to conduct business only in the ordinary course or, if not in the ordinary course, to first seek and obtain GE’s consent (which could delay or prevent Wabtec from undertaking business opportunities that may arise pending completion of the Transactions) and restricting the ability of Wabtec to pursue certain strategic transactions; |
| • | the dilution of the ownership interest of Wabtec’s current stockholders that would result from the Share Issuance and that Wabtec’s current stockholders, as a group, would control less than a majority of Wabtec’s outstanding common stock after consummation of the Transactions; |
| • | the fact that GE will acquire 9.9% of Wabtec’s common shares in the Transactions, including the possible effects that a sale of this stake would have on Wabtec’s stock price; |
| • | potential difficulties in integrating the management and operating personnel of Wabtec and GE Transportation, including the risk of losing key personnel due to uncertainties over future roles; |
| • | the risk that the Transactions and integration of GE Transportation with Wabtec may divert management attention and resources away from other strategic opportunities and from operational matters; |
| • | the operations of the business of GE Transportation will be dependent in part on the provision of transition services by GE for a period of time after the consummation of the Transactions; |
| • | the need for Wabtec to incur substantial indebtedness in connection with the Transactions; |
| • | the potential payment of a termination fee of $300 million by Wabtec in certain circumstances, including in certain circumstances based on regulatory challenges to the Transactions; |
| • | the restrictions imposed on Wabtec’s ability to take certain corporate actions under the terms of the Tax Matters Agreement, which could reduce its ability to engage in certain future business transactions that might be advantageous; |
| • | the absence of an indemnity from GE for breaches of representations and warranties; |
| • | the possibility that the Transactions may not be consummated and the potential adverse consequences, including substantial costs that would be incurred and potential damage to Wabtec’s reputation, if the Transactions are not completed; and |
| • | the other risks described under the section entitled ‘‘Risk Factors—Risks Related to the Transactions’’ beginning on page 115 of this proxy statement. |
| • | the Merger Agreement; |
| • | the Separation Agreement; |
| • | the Tax Matters Agreement; |
| • | the annual reports to stockholders and Annual Reports on Form 10-K of Wabtec and GE for the five years ended December 31, 2017; |
| • | certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Wabtec and GE; |
| • | certain other communications from Wabtec and GE to their respective stockholders; |
| • | certain publicly available research analyst reports for Wabtec and GE; |
| • | certain unaudited financial statements of GE Transportation (as described in the Merger Agreement); |
| • | certain internal financial analyses and forecasts for GE Transportation prepared by the management of GE; |
| • | certain internal financial analyses and forecasts for Wabtec standalone and pro forma for the Transactions, certain financial analyses and forecasts for tax benefits, including the Company Structure Benefits, associated with the Transactions, and certain financial analyses and forecasts for GE Transportation, in each case as prepared by the management of Wabtec and approved for Goldman Sachs’ use by Wabtec (the ‘‘Forecasts’’); |
| • | certain operating synergies projected by the management of Wabtec to result from the Transactions, as approved for Goldman Sachs’ use by Wabtec (the ‘‘Synergies’’); |
| • | estimates of the SpinCo Adjustment Amount and the Direct Sale Adjustment Amount (each as defined in the Separation Agreement) prepared by the management of Wabtec and approved for Goldman Sachs’ use by Wabtec (the ‘‘Adjustment Estimates’’); and |
| • | estimates of the amounts and timing of the TMA Payments prepared by management of Wabtec and approved for Goldman Sachs’ use by Wabtec (the ‘‘TMA Payment Estimates’’). |
| • | Talgo |
| • | CAF |
| • | Vossloh |
| • | Alstom |
| • | Ansaldo |
| • | Greenbrier |
| • | American Rail Car |
| • | Trinity |
| • | Allison Transmission |
| • | Caterpillar |
| • | Cummins |
| • | Paccar |
|
EV/LTM
EBITDA |
EV/LTM
EBITDA Through the Cycle |
EV/NTM
EBITDA |
EV/NTM
EBITDA Through the Cycle |
EV/CY+2
EBITDA |
EV/CY+2
EBITDA Through the Cycle |
|
|
Wabtec
|
17.9x
|
14.3x
|
14.7x
|
12.5x
|
13.8x
|
12.0x
|
|
Median of Rail Infrastructure & Equipment Selected Companies
|
9.3x
|
10.1x
|
8.8x
|
8.5x
|
8.1x
|
8.4x
|
|
Median of Rail Car Selected Companies
|
9.3x
|
6.6x
|
8.3x
|
6.4x
|
9.1x
|
6.7x
|
|
Median of Diversified Industrials/Transportation Selected Companies
|
8.6x
|
9.2x
|
8.0x
|
8.9x
|
7.8x
|
8.7x
|
|
Multiple
(Undisturbed Price) |
Multiple
(May 17, 2018 Price) |
|
|
EV*/2018E EBITDA (Forecasts, No Synergies)
|
15.0x
|
16.4x
|
|
EV*/2019E EBITDA (Forecasts, No Synergies)
|
10.9x
|
11.9x
|
|
EV*/2021E EBITDA (Forecasts, No Synergies)***
|
9.0x
|
9.9x
|
|
EV*/2018E EBITDA (Forecasts with Synergies)
|
11.2x
|
12.3x
|
|
EV*/2019E EBITDA (Forecasts with Synergies)
|
8.7x
|
9.5x
|
|
EV*/2021E EBITDA (Forecasts with Synergies)***
|
7.5x
|
8.2x
|
|
EV**/2018E EBITDA (Forecasts with Synergies)
|
10.1x
|
11.2x
|
|
EV**/2019E EBITDA (Forecasts with Synergies)
|
7.9x
|
8.7x
|
|
EV**/2021E EBITDA (Forecasts with Synergies)***
|
6.8x
|
7.5x
|
| * | No adjustment to implied EV to take into account the tax attributes of the Transaction |
| ** | Adjustment to implied EV to take into account the tax attributes of the Transaction |
| *** | Management of Wabtec instructed Goldman Sachs that these 2021 estimates were comparable to Through the Cycle estimates |
|
Date Announced
|
Acquiror
|
Target
|
|
October 2016
|
CIMIC
|
UGL Limited (86%)
|
|
July 2015
|
Wabtec
|
Faiveley Transport (51%)
|
|
February 2015
|
Hitachi
|
Ansaldo STS (40%)
|
|
June 2014
|
Alstom
|
GE Signaling
|
|
January 2015
|
Heinz Herman Thiele
|
Vossloh (70%)
|
|
December 2014
|
CSR Corporation
|
China CNR Corporation
|
|
November 2012
|
Siemens
|
Invensys Rail
|
|
May 2011
|
CVC
|
Delachaux (Majority Stake)
|
|
June 2010
|
Progress Rail
|
Electro-Motive Diesel
|
|
May 2006
|
Caterpillar
|
Progress Rail
|
|
December 2006
|
Thales
|
Alcatel (Rail Signaling)
|
|
October 2004
|
Sagard PE
|
Faiveley Transport (36%)
|
|
July 2002
|
Vossloh
|
Cogifer
|
|
July 2002
|
Voest-Alpin Stahl
|
VAE (Railway Systems) (55%)
|
|
EV/LTM EBITDA
|
|
|
High
|
14.7x
|
|
Median
|
9.7x
|
|
Low
|
8.5x
|
|
Acquiror
|
Target
|
|
United Technologies
|
Goodrich
|
|
TE Connectivity
|
Measurement Specialties
|
|
Siemens
|
Dresser Rand
|
|
Danaher Corporation
|
Pall Corporation
|
|
Solvay
|
Cytec
|
|
Berkshire Hathaway Inc.
|
Precision Castparts Corp.
|
|
Sherwin Williams
|
Valspar
|
|
MTS
|
PCB
|
|
Kion Group
|
Dematic
|
|
Thermo Fisher Scientific
|
FEI
|
|
Monsanto
|
Bayer
|
|
Rockwell Collins
|
B/E Aerospace, Inc.
|
|
Siemens
|
Mentor Graphics
|
|
Parker Hannifin Corporation
|
Clarcor
|
|
EV/LTM EBITDA
|
|
|
High
|
23.6x
|
|
Median
|
15.7x
|
|
Low
|
12.9x
|
| • | were based upon numerous estimates or expectations, beliefs, opinions and assumptions with respect to GE Transportation and Wabtec’s business, respectively, including their respective results of operations and financial conditions, customer requirements and competition, and with respect to general business, economic, market, regulatory and financial conditions and other future events, all of which are difficult to predict and many of which are beyond Wabtec’s or GE’s control and may not be realized; |
| • | do not take into account any transactions, circumstances or events occurring after the date they were prepared, including the Transactions, or the effect of any failure of the Merger or the other Transactions to occur; |
| • | do not give effect to adjustments to GE Transportation’s historical financial statements, as described in Note 7.a. under ‘‘Unaudited Pro Forma Condensed Combined Financial Statements,’’ which, with respect to the harmonization of revenue recognition policies, are expected (i) to produce a $63 million decrease from GE Transportation in Wabtec’s reported consolidated net revenue and EBIT in 2019 and no material effect in future years and (ii) not to materially change Wabtec’s future reported consolidated cash from operations; |
| • | are not necessarily indicative of current market conditions or values or future performance, which may be significantly more or less favorable than as set forth in the Financial Projections; and |
| • | are not, and should not be regarded as, a representation that any of the expectations contained in, or forming a part of, the Financial Projections will be achieved. |
| • | Economic growth consistent with recent years, including continued expansion and growth in international markets, new products and capabilities. |
| • | Execution of original equipment backlog in the Transit markets, increasing Wabtec’s installed base of products leading to aftermarket parts and services revenues. |
| • | Original equipment freight markets in North America remain consistent with historical averages, especially as it relates to build rate of freight cars and locomotives. Aftermarket freight sales are expected to support current and potentially expanding rail activity and volumes. |
| • | Energy markets remain strong, impacting rail activity as well as our industrial markets, such as heat exchangers, cooling product and power generation equipment. |
| • | Electronic products, including Signaling revenues, to grow with railroad’s continuing use of technology in their industry. Revenues are expected to increase with the introduction of additional new products improving the safety and efficiency of our customer’s operations. |
| • | Economic growth consistent with recent years, including continued expansion and growth in international markets. |
| • | Execution of original equipment backlog, increasing GE Transportation’s installed base of products leading to future aftermarket parts and services revenue. |
| • | Original equipment freight markets in North America to recover and be consistent with historical averages, especially as it relates to build rate of locomotives. Aftermarket services, including parts, service and modifications, to be consistent with current and expanding rail activity and volumes, and in line with existing backlog. |
| • | Mining markets remain strong based on commodity prices, consistent with historical averages of units manufactured, and consistent with current backlog. |
| • | Growth in digital products which enhance the operations of rail customers including fuel efficiency, network optimization, as well as train monitoring products. |
|
In millions
|
2018E
|
2019E
|
2020E
|
2021E
|
2022E
|
|
Revenue
|
$3,807
|
$4,914
|
$5,141
|
$5,493
|
$6,104
|
|
EBITDA(1)
|
$742
|
$1,026
|
$1,119
|
$1,234
|
$1,418
|
|
EBIT(2)
|
$605
|
$886
|
$981
|
$1,100
|
$1,291
|
|
EBITDA(1) less capital expenditures
|
$642
|
$927
|
$1,025
|
$1,141
|
$1,325
|
| (1) | Defined as earnings before interest and tax, plus depreciation and amortization. |
| (2) | Defined as earnings before interest and tax. |
|
In millions
|
2018E
|
2019E
|
2020E
|
2021E
|
2022E
|
|
Revenue
|
$4,210
|
$4,755
|
$5,206
|
$5,643
|
$6,063
|
|
EBITDA(1)
|
$665
|
$793
|
$915
|
$1,049
|
$1,181
|
|
EBIT(2)
|
$561
|
$683
|
$805
|
$939
|
$1,071
|
|
EBITDA(1) less capital expenditures
|
$543
|
$698
|
$811
|
$936
|
$1,060
|
| (1) | Defined as earnings before interest and tax, plus depreciation and amortization. |
| (2) | Defined as earnings before interest and tax. |
|
Name
|
No. of
Shares Subject to Unvested Wabtec Options |
Aggregate
Value of Unvested Wabtec Options ($)(1) |
No. of
Shares Underlying Unvested Wabtec Restricted Stock |
Aggregate
Value of Unvested Wabtec Restricted Stock ($) |
No. of
Shares Underlying Unvested Wabtec Restricted Stock Units |
Aggregate
Value of Unvested Wabtec Restricted Stock Units ($) |
No. of
Shares Underlying Unvested Wabtec Performance Units(2) |
Aggregate
Value of Unvested Wabtec Performance Units ($) |
Total
Value ($) |
|
Executive Officers
|
|||||||||
|
Raymond T. Betler
|
32,675
|
748,145
|
42,550
|
4,130,329
|
–
|
–
|
116,000
|
11,260,120
|
16,138,594
|
|
Patrick D. Dugan
|
12,250
|
262,231
|
27,750
|
2,693,693
|
–
|
–
|
42,000
|
4,076,940
|
7,032,864
|
|
Stéphane Rambaud-Measson
|
–
|
–
|
–
|
–
|
39,400
|
3,824,558
|
54,000
|
5,241,780
|
9,066,338
|
|
David L. DeNinno
|
9,800
|
216,318
|
29,800
|
2,892,686
|
–
|
–
|
34,000
|
3,300,380
|
6,409,384
|
|
Scott E. Wahlstrom
|
5,465
|
122,825
|
12,640
|
1,226,965
|
–
|
–
|
19,200
|
1,863,744
|
3,213,534
|
|
Albert J. Neupaver
|
39,175
|
443,245
|
39,075
|
3,793,010
|
–
|
–
|
96,000
|
9,318,720
|
13,554,975
|
|
5 Other Executive Officers(3)
|
6,351
|
149,682
|
10,523
|
1,021,468
|
–
|
–
|
23,700
|
2,300,559
|
3,471,709
|
|
Non-Executive Directors
|
|||||||||
|
Philippe Alfroid
|
–
|
–
|
1,620
|
157,253
|
–
|
–
|
–
|
–
|
157,253
|
|
Robert J. Brooks
|
–
|
–
|
1,620
|
157,253
|
–
|
–
|
–
|
–
|
157,253
|
|
Erwan Faiveley
|
–
|
–
|
1,620
|
157,253
|
–
|
–
|
–
|
–
|
157,253
|
|
Emilio A. Fernandez
|
–
|
–
|
1,620
|
157,253
|
–
|
–
|
–
|
–
|
157,253
|
|
Lee B. Foster, II
|
–
|
–
|
1,620
|
157,253
|
–
|
–
|
–
|
–
|
157,253
|
|
Linda S. Harty
|
–
|
–
|
1,620
|
157,253
|
–
|
–
|
–
|
–
|
157,253
|
|
Brian P. Hehir
|
–
|
–
|
1,620
|
157,253
|
–
|
–
|
–
|
–
|
157,253
|
|
Michael W.D. Howell
|
–
|
–
|
1,620
|
157,253
|
–
|
–
|
–
|
–
|
157,253
|
|
William E. Kassling
|
–
|
–
|
1,620
|
157,253
|
–
|
–
|
–
|
–
|
157,253
|
| (1) | For purposes of calculating these estimated values, the value of each unvested Wabtec Option is assumed to be equal to the number of shares of Wabtec common stock subject to each unvested Wabtec Option multiplied by the excess of the Assumed Wabtec Stock Price over the applicable exercise price per share of such unvested Wabtec Option. |
| (2) | Assumes 200% of the target number of shares granted. |
| (3) | Three executive officers who are not named executive officers held Wabtec equity awards as of July 16, 2018. This row includes the total number of shares of Wabtec common stock and the related total value of these unvested awards held by them. The other two executive officers who are not named executive officers did not hold any unvested Wabtec equity awards as of July 16, 2018. |
|
Name
|
Cash Severance
Payment ($)(1) |
Welfare and
Fringe Benefit Value ($)(2) |
Total
Value ($) |
|
Raymond T. Betler
|
5,000,000
|
22,800
|
5,022,800
|
|
Patrick D. Dugan
|
2,340,000
|
22,800
|
2,362,800
|
|
David L. DeNinno
|
1,955,000
|
22,800
|
1,977,800
|
|
Scott E. Wahlstrom
|
1,312,000
|
22,800
|
1,334,800
|
|
Albert J. Neupaver
|
2,800,000
|
22,800
|
2,822,800
|
|
2 Other Executive Officers
|
1,470,000
|
45,600
|
1,515,600
|
| (1) | Two times the sum of (1) the executive officer’s annual base salary and (2) the target bonus amount for the executive officer for 2018, based on the assumptions described above, to be paid in cash in a single lump sum 30 days following the date of termination. |
| (2) | Reflects the value of 24 months of continued welfare and fringe benefits pursuant to the Continuation Agreements, based on the full premium costs of such benefits. |
| • | The relevant price per share of Wabtec common stock is the Assumed Wabtec Stock Price; |
| • | The closing of the Merger occurs on July 16, 2018; and |
| • | Each named executive officer of Wabtec experiences a qualifying termination of employment (termination by Wabtec without ‘‘cause’’ or resignation by the named executive officer for ‘‘good reason’’, as such terms are defined in the Continuation Agreements or Mr. Rambaud-Measson’s employment agreement, as applicable) immediately following the assumed closing of the Merger. |
|
Named Executive Officer
|
Cash
($)(1) |
Equity
($)(2) |
Perquisites/
Benefits ($)(3) |
Total
($) |
|
Raymond T. Betler
|
5,000,000
|
16,138,594
|
22,800
|
21,161,394
|
|
Patrick D. Dugan
|
2,340,000
|
7,032,864
|
22,800
|
9,395,664
|
|
Stéphane Rambaud-Measson
|
4,050,000
|
9,066,338
|
–
|
13,116,338
|
|
David L. DeNinno
|
1,955,000
|
6,409,384
|
22,800
|
8,387,184
|
|
Scott E. Wahlstrom
|
1,312,000
|
3,213,534
|
22,800
|
4,548,334
|
|
Albert J. Neupaver
|
2,800,000
|
13,554,975
|
22,800
|
16,377,775
|
| (1) | Cash. The amounts in this column represent the cash severance payments to which the named executive officers would be entitled under the employment agreement for Mr. Rambaud-Measson and under the Continuation Agreements for Mr. Betler, Mr. Dugan, Mr. DeNinno, Mr. Wahlstrom and Mr. Neupaver, in each case, as described above. Mr. Rambaud-Measson becomes entitled to the severance amounts listed here upon a qualifying termination of employment during the term of his employment agreement. The Continuation Agreements provide for double-trigger payments upon a qualifying termination of employment that occurs within the 24-month period following a change of control. The estimated amount of each such payment is shown in the following table, with maximum achievements assumed for amounts based on actual performance. |
|
Named Executive Officer
|
Base Salary
($) |
Target
Annual Bonus ($) |
Pro Rata
Bonus Payment ($) |
Total
($) |
|
Raymond T. Betler
|
2,500,000
|
2,500,000
|
–
|
5,000,000
|
|
Patrick D. Dugan
|
1,300,000
|
1,040,000
|
–
|
2,340,000
|
|
Stéphane Rambaud-Measson
|
1,800,000
|
1,800,000
|
450,000
|
4,050,000
|
|
David L. DeNinno
|
1,150,000
|
805,000
|
–
|
1,955,000
|
|
Scott E. Wahlstrom
|
820,000
|
492,000
|
–
|
1,312,000
|
|
Albert J. Neupaver
|
1,400,000
|
1,400,000
|
–
|
2,800,000
|
| (2) | Equity. The amounts in this column include unvested Wabtec equity awards, the vesting of which will accelerate in connection with the closing of the Merger on a single-trigger basis, in each case, as described above. The amounts in this column for the unvested and accelerated Wabtec Options (1) disregard Wabtec Options that have an exercise price per share greater than the Assumed Wabtec Stock Price, and (2) do not reflect any taxes payable by the option holders. The following table sets forth the estimated value by type of equity award: |
|
Named Executive Officer
|
Unvested Wabtec
Options ($) |
Unvested Shares
of Wabtec Restricted Stock ($) |
Unvested Wabtec
Restricted Stock Units ($) |
Unvested Wabtec
Performance Units ($) |
Total
|
|
Raymond T. Betler
|
748,145
|
4,130,329
|
–
|
11,260,120
|
16,138,594
|
|
Patrick D. Dugan
|
262,231
|
2,693,693
|
–
|
4,076,940
|
7,032,864
|
|
Stéphane Rambaud-Measson
|
–
|
–
|
3,824,558
|
5,241,780
|
9,066,338
|
|
David L. DeNinno
|
216,318
|
2,892,686
|
–
|
3,300,380
|
6,409,384
|
|
Scott E. Wahlstrom
|
122,825
|
1,226,965
|
–
|
1,863,744
|
3,213,534
|
|
Albert J. Neupaver
|
443,245
|
3,793,010
|
–
|
9,318,720
|
13,554,975
|
| (3) | Perquisites/Benefits. The amounts in this column represent the estimated value of 24 months of continued health and welfare benefits provided pursuant to the Continuation Agreements, which provide double-trigger benefits, based on the full premium costs of such benefits. The estimated values of these benefits is $22,800 for each of Mr. Betler, Mr. Dugan, Mr. DeNinno, Mr. Wahlstrom and Mr. Neupaver. These named executive officers would become entitled to these amounts under the Continuation Agreements upon a qualifying termination of employment that occurs within the 24-month period following the closing of the Merger. In accordance with applicable SEC rules, the estimated value of health and welfare benefits was calculated based on the same assumptions used for financial reporting purposes. Each Continuation Agreement contains standard confidentiality and other restrictive covenants, including non-solicitation and non-competition covenants for a period of one year following termination of the executive’s employment. Mr. Rambaud-Measson is not entitled to any continued health or welfare benefits under the terms of his employment agreement. |
| • | at the time of the distribution, the amount of cash payable in lieu of fractional shares of Wabtec common stock to which such holder is entitled pursuant to the Merger Agreement and the amount of dividends or other distributions with a record date after the effective time of the Merger paid before that time with respect to such whole shares of Wabtec common stock; and |
| • | at the appropriate payment date, the amount of dividends or other distributions with a record date after the effective time of the Merger but prior to the distribution of such whole shares of Wabtec common stock and a payment date subsequent to the distribution of such whole shares of Wabtec common stock. |
| • | each party’s and its subsidiaries’ due incorporation, valid existence and good standing; |
| • | authority to enter into and perform obligations under the Transaction Documents; |
| • | board and stockholder approvals obtained or required in connection with the Transactions; |
| • | governmental consents and approvals; |
| • | absence of conflicts with or violations of governance documents, other obligations or laws; |
| • | capitalization; |
| • | subsidiaries; |
| • | financial statements; |
| • | accuracy of information supplied for use in this proxy statement and certain other disclosure documents to be filed with the SEC in connection with the Transactions; |
| • | absence of certain changes or events; |
| • | absence of undisclosed liabilities; |
| • | compliance with applicable laws; |
| • | permits; |
| • | absence of investigations or litigation; |
| • | interests in real property; |
| • | intellectual property matters; |
| • | tax matters; |
| • | employment and employee benefits matters; |
| • | environmental matters; |
| • | material contracts; and |
| • | payment of fees to brokers or finders in connection with the Transactions. |
| • | changes (or proposed changes) in GAAP, the regulatory accounting requirements applicable to any industry in which GE Transportation operates or applicable law, including the interpretation or enforcement thereof; |
| • | changes in the financial, credit or securities markets (including changes in prevailing interest rates, credit availability and liquidity, currency exchange rates, price levels or trading volumes in any securities market) or general economic or political conditions; |
| • | changes or conditions generally affecting the industry or segments of the industry in which GE Transportation operates; |
| • | acts of war, sabotage or terrorism or natural disasters; |
| • | other than for purposes of certain specified representations and warranties, the announcement or consummation of the Transactions or the identity of Wabtec, including, in each case, with respect to employees, customers, distributors, suppliers, financing sources, landlords, licensors and licensees; |
| • | any failure by GE Transportation to meet any internal or published budgets, projections, forecasts or predictions of financial performance for any period or any change in GE’s stock price or trading volume (except that the underlying cause of, or factors contributing to, such failure or change may be taken into account in determining whether a ‘‘material adverse effect’’ with respect to GE Transportation has occurred, unless such underlying cause or factor would be excluded by any of the above or below bullet points); |
| • | actions required or expressly contemplated by the Merger Agreement or taken by GE, SpinCo or any of their respective affiliates at the written direction, or with the written consent, of Wabtec; or |
| • | any stockholder or derivative litigation arising from or relating to the Merger Agreement or the transactions contemplated the Merger Agreement. |
| • | changes (or proposed changes) in GAAP, the regulatory accounting requirements applicable to any industry in which Wabtec and its subsidiaries operate or applicable law, including the interpretation or enforcement thereof; |
| • | changes in the financial, credit or securities markets (including changes in prevailing interest rates, credit availability and liquidity, currency exchange rates, price levels or trading volumes in any securities market) or general economic or political conditions; |
| • | changes or conditions generally affecting the industry or segments of the industry in which Wabtec and its subsidiaries operate; |
| • | acts of war, sabotage or terrorism or natural disasters; |
| • | other than for purposes of certain specified representations and warranties, the announcement or consummation of the Transactions or the identity of GE, including, in each case, with respect to employees, customers, distributors, suppliers, financing sources, landlords, licensors and licensees; |
| • | any failure by Wabtec to meet any internal or published budgets, projections, forecasts or predictions of financial performance for any period or any change in Wabtec’s stock price or trading volume (except |
| • | actions required or expressly contemplated by the Merger Agreement or taken by Wabtec or any of its affiliates at the written direction, or with the written consent, of GE; or |
| • | any stockholder or derivative litigation arising from or relating to the Merger Agreement or the transactions contemplated by the Merger Agreement. |
| • | amend the certificate of incorporation, bylaws or similar organizational documents of SpinCo or any Transferred Subsidiary; |
| • | split, combine or reclassify any shares of capital stock of SpinCo or any Transferred Subsidiary, or redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any shares of capital stock or other ownership interests of SpinCo or any Transferred Subsidiary; |
| • | issue, deliver or sell, or authorize the issuance, delivery or sale of, any shares of capital stock or other ownership interests of SpinCo or any Transferred Subsidiary, other than the issuance, delivery or sale of any shares of capital stock or other ownership interests of any Transferred Subsidiary to SpinCo or any other Transferred Subsidiary; |
| • | amend any term of any shares of capital stock or other ownership interests of SpinCo or any Transferred Subsidiary; |
| • | acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any material amount of assets, securities, properties, interests or businesses, other than (i) pursuant to existing contracts or commitments, (ii) acquisitions of goods or services in the ordinary course of business, or (iii) acquisitions of assets, securities, properties or interests in an amount not to exceed $10 million individually or $50 million in the aggregate; |
| • | sell, lease or otherwise transfer any assets, securities, properties, interests or businesses of GE Transportation, other than (i) pursuant to existing contracts or commitments and (ii) sales of inventory or other assets in the ordinary course of business; |
| • | make any material loans, advances or capital contributions to, or investments in, any other person; |
| • | incur any indebtedness for borrowed money or guarantees thereof, other than any indebtedness or guarantee incurred in the ordinary course of business; |
| • | except as required by applicable law, the terms of a GE Transportation employee benefit plan or collective bargaining or other labor agreement as in effect on the date of the Merger Agreement, (i) grant any material severance, retention or termination payment to, or enter into or materially amend any severance, retention, termination, employment, change in control or severance agreement with, any service provider of GE Transportation, (ii) materially increase the compensation or benefits provided to any service provider of GE Transportation, other than in the ordinary course of business based on the normal review cycle (provided that the requirement to be based on the normal review cycle will not apply to any service provider of GE Transportation who reports directly to the Chief Executive Officer of GE Transportation), (iii) grant any equity or equity-based awards to, or discretionarily accelerate the vesting (except in respect of certain restricted stock unit awards) or payment of any such awards held by, any service provider of GE Transportation, other than in the ordinary course of business based on the normal review cycle (provided that the requirement to be based on the normal review cycle will not apply to any service provider of GE Transportation who reports directly to the Chief Executive Officer of GE Transportation), (iv) hire, or terminate the employment (other than for cause) of, any service provider of GE Transportation who reports directly to the Chief Executive Officer of GE Transportation, or (v) hire any service provider of GE Transportation, other than as permitted under the terms of the Employee Matters Agreement; |
| • | change the methods of accounting of GE Transportation, except as required by concurrent changes in GAAP or in Regulation S-X of the Exchange Act; |
| • | other than in the ordinary course of business, (i) make any change (or file any such change) in any method of tax accounting or any annual tax accounting period, (ii) make, change or rescind any tax election, (iii) settle or compromise any tax liability or consent to any claim or assessment relating to taxes, (iv) file any amended tax return or claim for refund, (v) enter into any closing agreement relating to taxes, or (vi) waive or extend the statute of limitations in respect of taxes; in each case, to the extent that doing so would reasonably be expected to result in a material incremental cost to Wabtec, SpinCo or any of their respective subsidiaries; |
| • | settle, or offer or propose to settle any material claim, action or proceeding involving GE Transportation, other than in the ordinary course of business; |
| • | fail to use reasonable best efforts to maintain (with insurance companies substantially as financially responsible as their existing insurers) insurance against at least such risks and losses as are consistent in all material respects with the past practice of GE Transportation, except to the extent such actions affect similarly situated businesses of GE and its subsidiaries and do not disproportionately affect GE Transportation; or |
| • | agree or commit to do any of the foregoing. |
| • | amend its certificate of incorporation, bylaws or other similar organizational documents, except for the Wabtec Charter Amendment; |
| • | (i) split, combine or reclassify any shares of its capital stock, (ii) declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, except for (A) dividends by any of its wholly owned subsidiaries and (B) regular quarterly cash dividends by Wabtec with customary record and payment dates on the shares of Wabtec common stock not in excess of $0.12 per share for the quarter ended June 30, 2018 and $0.14 per quarter thereafter, or (iii) redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any shares of capital stock or other ownership interests of Wabtec or any of its subsidiaries, other than in connection with the cashless exercise of stock options and any other equity incentives; |
| • | (i) issue, deliver or sell, or authorize the issuance, delivery or sale of, any shares of capital stock or other ownership interests of Wabtec or any of its subsidiaries, other than the issuance, delivery or sale of (A) any shares of Wabtec common stock upon the exercise or settlement of Wabtec stock awards that are outstanding on the date of the Merger Agreement in accordance with the terms of those Wabtec stock awards on the date of the Merger Agreement and (B) any shares of capital stock or other ownership interests of any subsidiary of Wabtec to Wabtec or any other subsidiary of Wabtec or (ii) amend any term of any shares of capital stock or other ownership interests of Wabtec or any of its subsidiaries; |
| • | acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any material amount of assets, securities, properties, interests or businesses, other than (i) pursuant to existing contracts or commitments, (ii) acquisitions of goods or services in the ordinary course of business or (iii) acquisitions of assets, securities, properties or interests in an amount unless it would reasonably be expected to result in Wabtec ceasing to be rated by at least two of the three ‘‘ratings agencies’’ (meaning Moody’s Investors Service, Inc., Standard & Poor’s Ratings Services and Fitch Ratings, Inc.) as ‘‘investment grade’’ (meaning a rating of Baa3 or better by Moody’s Investors Service, Inc., a rating of BBB- or better by Standard & Poor’s Ratings Services, and a rating of BBB- or better by Fitch Ratings, Inc.); |
| • | sell, lease or otherwise transfer any of its assets, securities, properties, interests or businesses, other than (i) pursuant to existing contracts or commitments and (ii) sales of inventory or other assets in the ordinary course of business; |
| • | make any material loans, advances or capital contributions to, or investments in, any other person to the extent that any such loan, advance, capital contribution or investment would reasonably be expected, in any material respect, to result in a delay in obtaining, or otherwise adversely affect the ability of the parties to obtain, any antitrust approval or consent necessary to consummate the transactions contemplated by the Merger Agreement; |
| • | except as required by applicable law, the terms of a Wabtec employee benefit plan or collective bargaining or other labor agreement as in effect on the date of the Merger Agreement, (i) grant any material severance, retention or termination payment to, or enter into or materially amend any severance, retention, termination, employment, change in control or severance agreement with, any service provider of Wabtec who reports directly to the Chief Executive Officer of Wabtec, (ii) materially increase the compensation or benefits provided to any service provider of Wabtec who reports directly to the Chief Executive Officer of Wabtec, other than in the ordinary course of business, or (iii) grant any equity or equity-based awards to, or discretionarily accelerate the vesting or payment of any such awards held by, any service provider of Wabtec who reports directly to the Chief Executive Officer of Wabtec, other than in the ordinary course of business; |
| • | change its methods of accounting, except as required by concurrent changes in GAAP or in Regulation S-X of the Exchange Act; |
| • | other than in the ordinary course of business, (i) make any change (or file any such change) in any method of tax accounting or any annual tax accounting period, (ii) make, change or rescind any tax election, (iii) settle or compromise any tax liability or consent to any claim or assessment relating to taxes, (iv) file any amended tax return or claim for refund, (v) enter into any closing agreement relating to taxes, or (vi) waive or extend the statute of limitations in respect of taxes; in each case, to the extent that doing so would reasonably be expected to result in a material incremental cost to Wabtec, SpinCo or any of their respective subsidiaries; |
| • | settle, or offer or propose to settle any material claim, action or proceeding before a governmental authority involving or against Wabtec or any of its subsidiaries without first consulting with GE and giving due consideration to GE’s views in respect of such settlement, other than, in the ordinary course of business; |
| • | fail to use reasonable best efforts to maintain (with insurance companies substantially as financially responsible as their existing insurers) insurance against at least such risks and losses as are consistent in all material respects with the past practice of the business of Wabtec and its subsidiaries; or |
| • | agree or commit to do any of the foregoing. |
| • | preparing and filing as promptly as practicable with any governmental authority or other third party all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents; and |
| • | obtaining and maintaining all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any governmental authority or other third party that are necessary, proper or advisable to consummate the Transactions. |
| • | solicit, initiate or take any action to knowingly facilitate or encourage the submission of any Competing SpinCo Transaction (as defined below); |
| • | enter into or participate in any discussions or negotiations with, furnish any information relating to GE Transportation or afford access to the business, properties, assets, books or records of GE Transportation to, otherwise cooperate in any way with, or knowingly assist, participate in, facilitate or encourage any effort by any third party that has made, is seeking to make or would reasonably be expected to make, a Competing SpinCo Transaction; |
| • | approve, recommend or consummate any Competing SpinCo Transaction; or |
| • | enter into any agreement in principle, letter of intent, term sheet, merger agreement, acquisition agreement, option agreement or other similar instrument relating to a Competing SpinCo Transaction. |
| • | solicit, initiate or take any action to knowingly facilitate or encourage the submission of any Acquisition Proposal (as defined below); |
| • | enter into or participate in any discussions or negotiations with, furnish any information relating to Wabtec or any of its subsidiaries or afford access to the business, properties, assets, books or records of Wabtec or any of its subsidiaries, otherwise cooperate in any way with, or knowingly assist, participate in, facilitate or encourage any effort by any third party that has made, is seeking to make or would reasonably be expected to make, an Acquisition Proposal; |
| • | make an Adverse Recommendation Change (as defined below under ‘‘—Board Recommendation’’); |
| • | either fail to enforce, or grant any waiver or release under, any standstill or similar agreement with respect to any class of equity securities of Wabtec or any of its subsidiaries unless the Wabtec Board determines, after consultation with outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary duties under the DGCL; |
| • | approve any transaction under, or any person becoming an ‘‘interested stockholder’’ under, Section 203 of the DGCL; or |
| • | enter into any agreement in principle, letter of intent, term sheet, merger agreement, acquisition agreement, option agreement or other similar instrument relating to an Acquisition Proposal or consummate any Acquisition Proposal. |
| • | reasonably determined that the Acquisition Proposal constitutes, or is reasonably expected to lead to, a Superior Proposal (which is described below), and has determined (after consulting with outside legal counsel and its financial advisor) that the failure to take such action would be inconsistent with its fiduciary duties under the DGCL; |
| • | obtained from such third party a confidentiality agreement on terms no less favorable to Wabtec than those contained in Wabtec’s confidentiality agreement with GE and that include standstill obligations that Wabtec reasonably determines are customary and expressly allow Wabtec to comply with its obligations described in this section and delivered to GE a copy of the confidentiality agreement for informational purposes only; and |
| • | provided or made available to GE all such information (to the extent that such information has not been previously provided or made available to GE) prior to or substantially concurrently with the time it is provided or made available to such third party. |
| • | advise GE on a prompt basis of the status and terms of any discussions and negotiations described in the preceding paragraph with any third party; |
| • | notify (orally and in writing) GE promptly (but in no event later than the next business day) after receipt by Wabtec (or any of its representatives) of any Acquisition Proposal or any request for information relating to Wabtec or any of its subsidiaries or for access to the business, properties, assets, books or records of Wabtec or any of its subsidiaries by any third party that has made, is seeking to make or would reasonably be expected to make, an Acquisition Proposal, which notice must identify the third party making, and the terms and conditions of, any such Acquisition Proposal, indication or request; |
| • | keep GE reasonably informed, on a prompt basis, of the status and details of any such Acquisition Proposal, indication or request; and |
| • | promptly (but in no event later than the next business day after receipt) provide to GE copies of all correspondence and written materials sent or provided to Wabtec or any of its subsidiaries or any of its or their representatives that describes any material terms or conditions of any Acquisition Proposal (as well as written summaries of any oral communications addressing such matters). |
| • | any acquisition or purchase, direct or indirect, of 20% or more of the consolidated assets of Wabtec and its subsidiaries or 20% or more of any class of equity or voting securities of Wabtec or one or more of its subsidiaries whose assets, individually or in the aggregate, constitute 20% or more of the consolidated assets of Wabtec; |
| • | any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in such third party’s beneficially owning 20% or more of any class of equity or voting securities of Wabtec or one or more of its subsidiaries whose assets, individually or in the aggregate, constitute 20% or more of the consolidated assets of Wabtec; |
| • | a merger, consolidation, share exchange, business combination, sale of substantially all the assets, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving Wabtec or one or more of its subsidiaries whose assets, individually or in the aggregate, constitute 20% or more of the consolidated assets of Wabtec; or |
| • | any combination of the foregoing. |
| • | either fail to make, or withdraw or modify in a manner adverse to GE or SpinCo, the Wabtec Board’s recommendation that Wabtec stockholders vote in favor of the Share Issuance and the Wabtec Charter Amendment (the ‘‘Wabtec Recommendation’’); |
| • | fail to recommend against acceptance of any tender or exchange offer for Wabtec common stock within 10 business days after the commencement of such offer; or |
| • | approve, resolve to approve, adopt or recommend, or propose publicly to approve, resolve to approve, adopt or recommend, any Acquisition Proposal. |
| • | the Wabtec Board has determined (after consulting with outside legal counsel and its financial advisor) that failure to make an Adverse Recommendation Change with respect to the Superior Proposal or Intervening Event, as applicable, would be inconsistent with its fiduciary duties under the DGCL; |
| • | such Acquisition Proposal constitutes a Superior Proposal (if such Adverse Recommendation Change is to be taken in circumstances involving or relating to an Acquisition Proposal); |
| • | Wabtec promptly provides written notice to GE at least five business days before taking such action of its intention to do so, containing (i) in the case of any action intended to be taken in circumstances involving an Acquisition Proposal, the material terms of such Acquisition Proposal, including the most current version of the proposed agreement under which such Acquisition Proposal is proposed to be consummated and the identity of the third party making the Acquisition Proposal or (ii) in the case of any action to be taken in circumstances where there has been an Intervening Event, a reasonably detailed description of the underlying facts giving rise to, and the reasons for taking, such action; |
| • | GE does not make, within five business days after its receipt of the notice described in the third bullet point of this paragraph, an offer that (i) in the case of any action intended to be taken in circumstances involving an Acquisition Proposal, is at least as favorable to the Wabtec stockholders as such Acquisition Proposal or (ii) in the case of any action to be taken in circumstances where there has been an Intervening Event, obviates the need for taking such action; |
| • | during the five business day period following delivery of the notice described in the third bullet point of this paragraph (and three business day period in respect of a subsequent revised Acquisition Proposal described in the following bullet point), Wabtec and its representatives negotiate in good faith with GE and its representatives regarding any revisions proposed by GE to the terms of the transactions contemplated by the Merger Agreement; and |
| • | if there is any amendment to the financial or other material terms of the Acquisition Proposal during the five business day period following delivery of the notice described in the third bullet point of this paragraph, Wabtec provides a new written notice of the terms of such amended Acquisition Proposal giving GE an additional three business day period to make an offer or proposal to revise the terms of the Merger Agreement in a manner that the Wabtec Board determines to be at least as favorable to Wabtec stockholders as such amended Acquisition Proposal. |
| • | changes (or proposed changes) in GAAP, the regulatory accounting requirements applicable to any industry in which GE, SpinCo or any of their respective subsidiaries operate or applicable law, in each case to the extent affecting GE Transportation; |
| • | changes in the financial, credit or securities markets (including changes in prevailing interest rates, credit availability and liquidity, currency exchange rates, price levels or trading volumes in any securities market) or general economic or political conditions, in each case to the extent affecting GE Transportation; |
| • | changes or conditions generally affecting the industry or segments thereof in which GE, SpinCo or any of their respective subsidiaries operate, in each case to the extent affecting GE Transportation; |
| • | acts of war, sabotage or terrorism or natural disasters, in each case to the extent affecting GE Transportation; |
| • | the announcement of the Transactions or the identity of GE or Wabtec, including, in each case, with respect to employees, customers, distributors, suppliers, financing sources, landlords, licensors and licensees; |
| • | any failure by Wabtec or any of its subsidiaries, GE or any of its subsidiaries or GE Transportation to meet any internal or published budgets, projections, forecasts or predictions of financial performance for any period or any change in GE or Wabtec’s stock price or trading volume (except that the underlying cause of, or factors contributing to, such failure or change may be taken into account in determining whether there has been an Intervening Event, unless such underlying cause or factor would otherwise be excepted by another bullet point of this paragraph); |
| • | actions required or expressly contemplated by the Merger Agreement to be taken by Wabtec, Merger Sub, GE, SpinCo or any of their respective affiliates; |
| • | actions taken by GE, SpinCo or any of their respective affiliates at the written direction, or with the written consent, of Wabtec; or |
| • | any stockholder or derivative litigation arising from or relating to the Merger Agreement or the Transactions. |
| • | maintain the Commitment Letter in effect until the earlier of the initial funding of the debt financing or the effectiveness of definitive agreements with respect thereto; |
| • | negotiate definitive agreements with respect to the debt financing, on the terms and conditions contained in the Commitment Letter or on such other terms that would not be prohibited by the Merger Agreement, and upon effectiveness thereof, maintain such definitive agreements in effect until the initial funding of the debt financing; |
| • | comply with the obligations that are set forth in the Commitment Letter that are applicable to Wabtec or any of its subsidiaries and satisfy on a timely basis all conditions precedent to the availability of the debt financing set forth in the Commitment Letter and the definitive agreements for the debt financing (upon the effectiveness thereof) that are within its control; and |
| • | fully enforce the rights of Wabtec under the Commitment Letter and the definitive agreements for the debt financing (upon the effectiveness thereof). |
| • | each party’s obligation to (i) give to the other party and its authorized representatives reasonable access to the personnel, offices, properties, books and records of Wabtec or GE Transportation, as applicable, (ii) furnish to the other party and its authorized representatives such financial and operating data and other information relating to Wabtec or GE Transportation, as applicable as such persons may reasonably request, and (iii) instruct its employees, counsel, financial advisors, auditors and other authorized representatives to cooperate with the other party in its investigation of Wabtec or GE Transportation, as applicable. |
| • | preservation of the indemnification provisions in the certificate of incorporation and bylaws of SpinCo with respect to directors, officers, employees or agents of SpinCo; |
| • | the obligations of Wabtec to obtain the release of GE from certain contracts, instruments or other arrangements to the extent relating to GE Transportation and for which GE or any of its subsidiaries other than the Transferred Subsidiaries is a guarantor or person required to provide financial support, including by substituting Wabtec or one of its subsidiaries for the GE entity that is a party to the contract, instrument or arrangement; |
| • | the obligations of GE and Wabtec to take all actions necessary to cause SpinCo and Merger Sub, as applicable, to perform their obligations under the Merger Agreement and to consummate the Merger on the terms and conditions set forth in the Merger Agreement; |
| • | an acknowledgement that Wabtec, GE, SpinCo and Merger Sub exercise complete control and supervision over their respective operations prior to the consummation of the Merger; |
| • | the listing of the shares of Wabtec common stock to be issued as part of the merger consideration in the Merger on the NYSE; |
| • | steps required to cause any disposition of shares of SpinCo common stock or acquisitions of Wabtec common stock resulting from the Transactions by each officer or director who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to Wabtec or SpinCo to be exempt under Rule 16b-3 promulgated under the Exchange Act; |
| • | confidentiality obligations of GE and Wabtec; |
| • | each party’s obligation to take appropriate actions, and to assist and cooperate with the other parties, to do all things necessary, proper or advisable under applicable law to execute and deliver the Additional Agreements and any other documents as may be required to carry out the provisions of the Merger Agreement and to consummate the Transactions; and |
| • | GE’s obligation to provide to Wabtec audited financial statements and interim financial statements of GE Transportation. |
| • | the Internal Reorganization, the Direct Sale and the Distribution will have been consummated in all material respects in accordance with the Separation Agreement; |
| • | specified required filings with the SEC will have become effective under the Securities Act or the Exchange Act, as applicable, and will not be the subject of any stop order or any litigation, suit, proceeding or action before the SEC seeking a stop order; |
| • | the shares of Wabtec common stock to be issued in the Merger will have been approved for listing on the NYSE; |
| • | the approval by Wabtec stockholders of the Share Issuance and Wabtec Charter Amendment will have been obtained; |
| • | all waiting periods under the HSR Act relating to the Merger will have been terminated or expired and all other material governmental approvals required to consummate the closing of the Merger will have been obtained, including the antitrust approvals in specified agreed-upon jurisdictions; and |
| • | no court of competent jurisdiction or other governmental authority will have enacted or issued any applicable law that is still in effect restraining, enjoining or prohibiting the Internal Reorganization, the Direct Sale, the Distribution or the Merger. |
| • | each of GE and SpinCo will have performed in all material respects all of its obligations under the Merger Agreement required to be performed by it prior to the effective time of the Merger; |
| • | the representations and warranties of GE with respect to corporate existence and power, corporate authorization, capitalization and brokers’ fees (disregarding all materiality, material adverse effect and similar qualifications contained in such representations and warranties) will be true in all material respects at and as of the effective time of the Merger as if made at and as of such time (other than such representations and warranties that by their terms address matters only as of another specified time, which will be true in all material respects only as of such time); |
| • | the other representations and warranties of GE (disregarding all materiality, material adverse effect and similar qualifications contained in such representations and warranties) will be true at and as of the |
| • | Wabtec will have received a certificate signed by an executive officer of GE to the effect that each of the conditions specified in the first three bullet points above have been satisfied; |
| • | Wabtec will have received the Wabtec Tax Opinion, which will not have been withdrawn or modified in any material respect, and copies of the GE Tax Opinions; |
| • | GE and SpinCo (or a subsidiary thereof) will have entered into each applicable Additional Agreement and each such agreement will be in full force and effect; |
| • | since the date of the Merger Agreement, no event, change, effect, development or occurrence will have occurred that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on GE Transportation (as discussed above under ‘‘—Representations and Warranties’’); and |
| • | GE will have delivered to Wabtec the audited financial statements of GE Transportation and such audited financial statements will not differ from the applicable unaudited financial statements of GE Transportation that GE delivered to Wabtec prior to the date of the Merger Agreement in a manner that is material to the intrinsic value (determined in a manner consistent with appropriate valuation methodologies) of GE Transportation in a manner that is adverse (excluding any differences resulting from (x) any changes in the amount of goodwill or intangible assets and (y) certain other matters specifically agreed upon by the parties), except that Wabtec will be deemed to have irrevocably waived the condition set forth in this bullet point if it does not exercise its right to terminate the Merger Agreement within 20 business days following GE’s delivery of audited financial statements of GE Transportation. |
| • | each of Wabtec and Merger Sub will have performed in all material respects all of its obligations under the Merger Agreement required to be performed by it prior to the effective time of the Merger, |
| • | the representations and warranties of Wabtec with respect to corporate existence and power, corporate authorization, capitalization, brokers’ fees and no shareholders rights plans or antitakeover laws (disregarding all materiality, material adverse effect and similar qualifications contained in such representations and warranties) will be true in all material respects at and as of the effective time of the Merger as if made at and as of such time (other than such representations and warranties that by their terms address matters only as of another specified time, which will be true in all material respects only as of such time); |
| • | the other representations and warranties of Wabtec and Merger Sub contained in the Merger Agreement (disregarding all materiality, material adverse effect and similar qualifications contained in such representations and warranties) will be true at and as of the effective time of the Merger as if made at and as of such time (other than representations and warranties that by their terms address matters only as of another specified time, which will be true only as of such time), with only such exceptions as have not had and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Wabtec (as discussed above under ‘‘—Representations and Warranties’’); |
| • | GE will have received a certificate signed by an executive officer of Wabtec to the effect that each of the conditions specified in the first three bullet points above have been satisfied; |
| • | GE will have received the GE Tax Opinions, which will not have been withdrawn or modified in any material respect, and a copy of the Wabtec Tax Opinion; |
| • | Wabtec (or a subsidiary thereof) will have entered into each applicable Additional Agreement and each such agreement will be in full force and effect; |
| • | since the date of the Merger Agreement, no event, change, effect, development or occurrence will have occurred that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on Wabtec (as discussed above under ‘‘—Representations and Warranties’’); and |
| • | GE will have received the Direct Sale Purchase Price. |
| • | if the Merger has not been consummated by May 20, 2019 (such date, as it may be extended as described below, the ‘‘End Date’’), unless, as of May 15, 2019, the only conditions to the consummation of the Merger that have not been satisfied or waived are the conditions relating to the HSR Act and other material governmental approvals required with respect to the Transaction and the absence of any laws or governmental orders prohibiting the Transactions relating to the foregoing and certain conditions that certain of the Transactions have been consummated, in which case either party may elect to extend the End Date from May 20, 2019 to August 20, 2019, except that this right to terminate will not be available to (x) any party whose breach of any provision of the Merger Agreement results in the failure of the closing of the Merger to have occurred by the End Date or (y) Wabtec at a time when the GE is permitted to proceed with a Termination for Failure to Pay Direct Sale Purchase Price (as described below); |
| • | if any governmental authority has issued any final and nonappealable order, decree or judgment permanently restraining, enjoining or otherwise prohibiting the Transactions, except that this right will not be available to any party whose breach of the Merger Agreement results in the imposition of any such order, decree or judgment; or |
| • | if Wabtec stockholders fail to approve the Share Issuance and the Wabtec Charter Amendment at the meeting of Wabtec stockholders (including any adjournment, continuation or postponement of such meeting), except that this right will not be available to Wabtec if Wabtec has not complied with its obligations described above in ‘‘—No Solicitation’’ and ‘‘—Board Recommendation’’. |
| • | a breach of any representation or warranty or failure to perform any covenant or agreement on the part of GE or SpinCo set forth in the Merger Agreement will have occurred that would cause the Additional Conditions to the Merger for Wabtec’s Benefit not to be satisfied, and such breach or failure to perform (i) is incapable of being cured by the End Date or (ii) has not been cured by GE or SpinCo within 45 days following written notice to GE from Wabtec of such breach or failure to perform and Wabtec’s intent to terminate the Merger Agreement; or |
| • | the Financial Statement Condition for Wabtec’s Benefit is not satisfied upon the delivery to Wabtec of the audited financial statements of GE Transportation and Wabtec exercises its right of termination within 20 business days of such delivery. |
| • | a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Wabtec or Merger Sub set forth in the Merger Agreement will have occurred that would cause the |
| • | an Adverse Recommendation Change has occurred, or at any time after receipt or public announcement of an Acquisition Proposal, the Wabtec Board has failed to reaffirm the Wabtec Board Recommendation as promptly as reasonably practicable (but in any event within five business days) after receipt of any written request to do so from GE; |
| • | Wabtec has failed to comply with its obligations under the Merger Agreement relating to the meeting of Wabtec stockholders, the solicitation of alternative transactions or the content of the proxy statement and registration statements, except for de minimis breaches with respect to these obligations that are promptly cured, if such breach is curable; |
| • | all of the Joint Conditions to the Merger and Wabtec Conditions to the Merger have been satisfied (other than (i) the condition that the Internal Reorganization, the Direct Sale and the Distribution will have been consummated in all material respects in accordance with the Separation Agreement and (ii) those conditions which by their terms or nature are to be satisfied at the closing of the Merger), GE has given written notice to Wabtec that it is prepared to consummate the Internal Reorganization, the Distribution and the closing of the Merger if the Direct Sale occurs and the Direct Sale does not occur within two business days of such written notice as a result of Direct Sale Purchaser’s failure to pay the Direct Sale Purchase Price (a termination pursuant to this provision, a ‘‘Termination for Failure to Pay Direct Sale Purchase Price’’); or |
| • | any Governmental Authority has issued any order, decree or judgment in respect of any governmental approvals required to consummate the Merger, including under the HSR Act or other antitrust laws, restraining, enjoining or otherwise prohibiting any of the Transactions which order, decree or judgment has not become final and non-appealable and Wabtec has not, within 30 days of such order, decree or judgment first being in effect, instituted appropriate proceedings seeking to, or thereafter has not been using reasonable best efforts to, have such order, decree or judgment vacated, lifted, reversed, overturned or terminated. |
| • | if GE terminates the Merger Agreement due to (i) an Adverse Recommendation Change or a failure by the Wabtec Board to reaffirm the Wabtec Board Recommendation, (ii) Wabtec’s failure to include the Wabtec Recommendation in the Wabtec proxy statement, or (iii) Wabtec’s failure to comply with its obligations under the Merger Agreement relating to the meeting of Wabtec stockholders or the non-solicitation of alternative transactions; |
| • | if (i) Wabtec or GE terminates the Merger Agreement because the Merger has not been consummated by the End Date (if the Wabtec stockholder approval of the Share Issuance and Wabtec Charter Amendment has not been received) or the Wabtec stockholders fail to approve the Share Issuance or the Wabtec Charter Amendment or there is a Termination for Wabtec’s Material Breach, (ii) prior to the termination of the Merger Agreement, an Acquisition Proposal is publicly announced or otherwise has |
| • | if Wabtec or GE terminates the Merger Agreement because (i) the End Date has passed or (ii) any governmental authority of any competent jurisdiction has issued an order, judgment or decree that has the effect of permanently prohibiting the consummation of the Transactions and such order has become final and nonappealable (solely in respect of the matters described in (A) or (B) below), if, as of the time of such termination, one or more of the conditions to closing set forth in the Merger Agreement (discussed above) relating to (A) the termination or expiration of any applicable waiting period under the HSR Act relating to the Merger, (B) taking, making or obtaining all material actions by, consents or approvals of, or in respect of or filing with any governmental authority required to permit the consummation of the closing of the Merger or (C) any order, judgment or decree issued by a governmental authority of competent jurisdiction that is in effect and has the effect of permanently prohibiting the consummation of the Merger (if the order, judgment or decree relates to any of the matters references in (A) and (B)) have not been satisfied, but all Wabtec Conditions to the Merger (other than those conditions which by their terms or nature are to be satisfied at the closing, but provided that such conditions not so satisfied are capable of being satisfied promptly if the closing of the Merger were to occur) have been satisfied or waived; |
| • | if there is a Termination for Wabtec’s Material Breach in respect of Wabtec’s obligations described above under ‘‘—Regulatory Matters’’; or |
| • | if GE terminates the Merger Agreement because (i) any governmental authority of any competent jurisdiction has issued an order, judgment or decree that has the effect of permanently prohibiting the consummation of the Transactions, which such order has not become final and nonappealable and (ii) Wabtec fails to (A) institute appropriate proceedings seeking to have such order, judgment or decree vacated, lifted reversed, overturn or terminated within 30 days of such order, judgment or decree first being in effect or (B) use reasonable best efforts to have such order, judgment or decree vacated, lifted reversed, overturn or terminated thereafter. |
| • | GE will transfer to SpinCo or a SpinCo Transferred Subsidiary all the SpinCo Assets (as defined below); |
| • | SpinCo will, or will cause a SpinCo Transferred Subsidiary to, transfer to GE and/or any of its subsidiaries that is not a Transferred Subsidiary all the Excluded Assets (as defined below); and |
| • | GE will transfer to SpinCo or a SpinCo Transferred Subsidiary, and SpinCo will, or cause a SpinCo Transferred Subsidiary to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill, in accordance with their respective terms, all of the SpinCo Liabilities (as defined below) and SpinCo will, or cause a SpinCo Transferred Subsidiary to, transfer to GE and/or any of its subsidiaries that is not a Transferred Subsidiary, and GE and/or such subsidiaries will assume all of the Excluded Liabilities (as defined below), in each case regardless of (i) when or where such Excluded Liabilities arose or arise, (ii) where or against whom such Excluded Liabilities are asserted or determined, (iii) whether such Excluded Liabilities arise from or are alleged to arise from negligence, gross negligence, recklessness, violation of applicable law, willful misconduct, bad faith, fraud or misrepresentation by GE or any of its subsidiaries that is not a Transferred Subsidiary or SpinCo or any SpinCo Transferred Subsidiary, as the case may be, or any of their past or present respective representatives, (iv) which person is named in any action or proceeding associated with any Excluded Liability and (v) whether the facts on which such Excluded Liabilities are based occurred prior to, on or after the date of the Separation Agreement. |
| • | all owned real property listed on a schedule to the Separation Agreement, together with all structures and improvements and all appurtenant rights, privileges and easements relating thereto, that are used more than 80% in, arise, directly or indirectly, more than 80% out of, or are related more than 80% to, the operation or conduct of GE Transportation; |
| • | all leasehold interests under the real property leases governing the leased real property listed on a schedule to the Separation Agreement; |
| • | all of the tangible personal property, governmental licenses and permits, including environmental permits, contracts and certain intellectual property third party licenses specified on a schedule to the Separation Agreement that are, in each case, used more than 80% in, arise, directly or indirectly, more than 80% out of, or are related more than 80% to, GE Transportation; |
| • | all expenses to the extent related to GE Transportation that have been prepaid by GE or any of its subsidiaries, including lease and rental payments to the extent related to GE Transportation; |
| • | all accounts and other receivables to the extent related to GE Transportation, other than Factored Customer Receivables (as defined below under ‘‘—Cash, Debt and Receivables Adjustment’’); |
| • | all rights, claims, credits, causes of action (including counter-claims and rights of set-off) against third parties to the extent related to GE Transportation, including unliquidated rights under manufacturing and vendors’ warranties to the extent related to GE Transportation; |
| • | all intellectual property, including the registerable intellectual property listed on a specified schedule to the Separation Agreement and all other intellectual property rights (excluding the GE Names and Marks (defined below) and registrable IP) that are used exclusively in GE Transportation, and the right to sue and collect damages for past, present and future infringement, misappropriation, violation or dilution of any of the forgoing (‘‘SpinCo intellectual property’’); |
| • | all rights to technology and data that are used exclusively by GE and its subsidiaries in GE Transportation to the extent owned by GE or any of its subsidiaries (‘‘SpinCo data/technology’’); |
| • | all rights to software listed on a specified schedule to the Separation Agreement to the extent owned by GE or any of its subsidiaries (‘‘SpinCo software’’); |
| • | all corporate or limited liability company minute books and related stock records of SpinCo and the SpinCo Transferred Subsidiaries and all other books and records that are used more than 80% in, arise, directly or indirectly, more than 80% out of, or are related more than 80% to, GE Transportation, excluding tax returns and other tax records; |
| • | all assets expressly to be retained by or transferred to SpinCo or a SpinCo Transferred Subsidiary pursuant to the Employee Matters Agreement as more fully described in the section of this proxy statement entitled ‘‘Other Agreements—Employee Matters Agreement’’; |
| • | all of the equity interests of the SpinCo Transferred Subsidiaries; |
| • | all of the equity interests of certain joint ventures listed on a schedule to the Separation Agreement; |
| • | the right to enforce the confidentiality or assignment provisions of any confidentiality, non-disclosure or other similar contracts (including any contracts with prospective purchasers of all or any portion of GE Transportation) to the extent related to confidential information of GE Transportation; |
| • | all rights of SpinCo and the SpinCo Transferred Subsidiaries under the Separation Agreement or any other Transaction Documents and the certificates and instruments delivered in connection therewith; |
| • | all assets set forth on or reflected in the December 31, 2017 balance sheet included in the unaudited financial statements of GE Transportation delivered to Wabtec prior to the date of the Merger Agreement, as the same may change as a result of the operation of GE Transportation between the date of such balance sheet and the Distribution Date; |
| • | restricted cash held by SpinCo or a SpinCo Transferred Subsidiary and cash and cash equivalents calculated in accordance with the cash adjustment as more fully described below under ‘‘—Cash, Debt and Receivables Adjustment’’; |
| • | transferred notes listed on a specified schedule to the Separation Agreement; |
| • | all other assets of a type not expressly covered in the definition of ‘‘SpinCo Assets’’ that are owned by GE or any of its subsidiaries and that are used more than 80% in, arise, directly or indirectly, more than 80% out of or are related more than 80%, to the operation or conduct of GE Transportation, including items listed on specified schedules to the Separation Agreement; and |
| • | certain assets listed on a specified schedule to the Separation Agreement. |
| • | all cash and cash equivalents, other than cash and cash equivalents counted in determining the Direct Sale Closing Cash (as defined below under ‘‘—Cash, Debt and Receivables Adjustment’’) and restricted cash held by SpinCo or any Transferred Subsidiary as of the Distribution Effective Time calculated in accordance with the cash adjustment as more fully described below under ‘‘—Cash, Debt and Receivables Adjustment’’; |
| • | all rights to the GE Names and Marks (as defined below under ‘‘—GE Names and Marks’’), together with any contracts granting rights to use the same; |
| • | all owned and leased real property other than owned or leased real property constituting SpinCo Assets; |
| • | other than any loans or advances between or among GE and its subsidiaries on behalf of GE Transportation (and not any other business of GE), all loans or advances among GE and any of its subsidiaries (including, for the avoidance of doubt, advances made in connection with GE’s trade payables program); |
| • | any work papers of GE’s auditors and any other tax records (including accounting records) of GE or any of its subsidiaries other than SpinCo or any Transferred Subsidiary, provided, however, that SpinCo will in all events be entitled to copies of, and will be entitled to use, any such books and records to the extent solely related to GE Transportation, SpinCo or any Direct Sale Transferred Subsidiary; |
| • | all employee plans, except to the extent expressly transferred to, or retained by, SpinCo or any Transferred Subsidiary in the Employee Matters Agreement as more fully described in the section of this proxy statement entitled ‘‘Other Agreements—Employee Matters Agreement’’; |
| • | without limiting SpinCo’s rights under the Separation Agreement, all insurance policies of GE or any of its subsidiaries, and all rights of any nature with respect to any insurance policy, including any recoveries thereunder and any rights to assert claims seeking any such recoveries; |
| • | for the avoidance of doubt, any assets held on the date of the Separation Agreement, or acquired after the date of the Separation Agreement, and sold or otherwise disposed of prior to the Distribution Effective Time; |
| • | all rights, claims, causes of action (including counterclaims and rights of set-off) and defenses against third parties to the extent relating to any of the Excluded Assets or the Excluded liabilities as well as any books, records and privileged information relating thereto; |
| • | except as expressly contemplated pursuant to the Additional Agreements, intellectual property rights (‘‘GE intellectual property’’), software (‘‘GE software’’) and technology and data (‘‘GE technology/data’’), in each case, that do not constitute a SpinCo Asset; |
| • | all assets expressly retained by or transferred to GE or any of its subsidiaries that is not a Transferred Subsidiary pursuant to the Employee Matters Agreement as more fully described in the section of this proxy statement entitled ‘‘Other Agreements—Employee Matters Agreement’’; |
| • | any governmental licenses and permits, including environmental licenses and permits, held by GE or any of its subsidiaries that is not a Transferred Subsidiary that are not used more than 80% in, do not arise, directly or indirectly, more than 80% out of, or are not related more than 80% to, GE Transportation; |
| • | all interests of GE or any of its subsidiaries that is not a Transferred Subsidiary under the Transaction Documents and the confidentiality agreement between GE and Wabtec; |
| • | all personnel and employment records for employees and former employees of GE or any of its subsidiaries that is not a Transferred Subsidiary or SpinCo or any Transferred Subsidiary who are not continuing employees under the Employee Matters Agreement, except to the extent necessary for SpinCo or any Transferred Subsidiary to meet its obligations pursuant to the Separation Agreement or the Employee Matters Agreement as more fully described in the section of this proxy statement entitled ‘‘Other Agreements—Employee Matters Agreement’’; |
| • | any other assets to the extent not used more than 80% in, arising, directly or indirectly, more than 80% out of, or related more than 80% to, GE Transportation, except (x) SpinCo intellectual property, SpinCo software and SpinCo data/technology and (y) assets expressly to be retained by or transferred to SpinCo or any Transferred Subsidiary pursuant to the Employee Matters Agreement as more fully described in the section of this proxy statement entitled ‘‘Other Agreements—Employee Matters Agreement’’; |
| • | other than (i) any accounts receivable exclusively between or among GE and any of its subsidiaries on behalf of GE Transportation (and not any other GE business) and (ii) any surviving intercompany accounts (as defined below under ‘‘—SpinCo Liabilities’’), any intercompany accounts receivable owing from GE or any of its affiliates; |
| • | (i) all corporate minute books (and other similar corporate records) and stock records of GE and its subsidiaries that are not Transferred Subsidiaries, (ii) any books and records relating to the Excluded Assets, (iii) any books and records or other materials of or in the possession of GE or any of its subsidiaries that is not a Transferred Subsidiary or SpinCo or any Transferred Subsidiary that (A) GE or any of its subsidiaries that is not a Transferred Subsidiary is required by applicable law to retain, (B) GE or any of its subsidiaries that is not a Transferred Subsidiary reasonably believes are necessary to enable it to prepare and/or file tax returns, or (C) GE or any of its subsidiaries that is not a Transferred Subsidiary is prohibited by applicable law from delivering to SpinCo, any Transferred Subsidiary or Wabtec (including by transfer of equity of SpinCo or any Transferred Subsidiary), including any books and records, reports, information or other materials that disclose in any manner the contents of any other books and records, reports, information or other materials that constitute an Excluded Asset under this subclause (C) or (iv) any copies of any books and records that GE or any of its subsidiaries that is not a Transferred Subsidiary retains pursuant to the retention of books and records provision of the Separation Agreement; |
| • | (i) all records and reports prepared or received by GE or any of its subsidiaries in connection with the disposition of GE Transportation or the Transactions, including all analyses relating to GE Transportation or Wabtec so prepared or received, (ii) all confidentiality agreements with prospective purchasers of GE Transportation or any portion thereof (other than to the extent set forth in the 14th bullet point of the definition of ‘‘SpinCo Assets’’), and all bids and expressions of interest received from third parties with respect to GE Transportation, and (iii) all privileged materials, documents and records that are not used more than 80% in, do not arise, directly or indirectly, more than 80% out of, or are not related more than 80% to, GE Transportation; |
| • | any Factored Customer Receivables (as defined below under ‘‘—Cash, Debt and Receivables Adjustment’’); and |
| • | certain assets listed on a schedule to the Separation Agreement. |
| • | all liabilities set forth on or reflected in the December 31, 2017 balance sheet included in the unaudited financial statements (including the notes thereto) delivered to Wabtec prior to the date of the Merger Agreement, as the same may change as a result of the operation of GE Transportation between the date of such balance sheet and the Distribution Date; |
| • | all liabilities under any receivable, payable or loan between GE or any of its subsidiaries on behalf of a GE business other than GE Transportation, on the one hand, and GE or any of its subsidiaries on behalf of GE Transportation, on the other hand, that (i) expressly arises pursuant to any Transaction Document, or (ii) is a receivable or payable arising from purchases or sales of products or services in the ordinary course between GE or any of its subsidiaries on behalf of a GE business other than GE Transportation, on the one hand, and GE or any of its subsidiaries on behalf of GE Transportation, on the other hand (including payables under GE’s trade payables program), including those listed on a specified schedule to the Separation Agreement (collectively, the ‘‘surviving intercompany accounts’’); |
| • | all liabilities arising under contracts constituting SpinCo Assets; |
| • | all liabilities to the extent arising, directly or indirectly, more than 80% out of, or related more than 80% to, GE Transportation (including all liabilities with respect to the SpinCo Assets and Direct Sale Assets), whether accruing before, on or after the Distribution Date (whether direct or indirect, known or unknown, absolute or contingent, asserted or unasserted, accrued or unaccrued, liquidated or unliquidated, matured or unmatured or due or to become due as of the Distribution Date); |
| • | all liabilities, whether accruing before, on or after the Distribution Date, (i) (A) under environmental laws and (B) arising from or relating in any way to the SpinCo Assets, the Direct Sale Assets, GE |
| • | all liabilities expressly transferred to, or retained by, SpinCo or any Transferred Subsidiary pursuant to the Employee Matters Agreement as more fully described in the section of this proxy statement entitled ‘‘Other Agreements—Employee Matters Agreement’’; |
| • | all liabilities to the extent arising from or related to any business or line of business disposed of or discontinued, or any facility or other real property disposed of, by or on behalf of GE Transportation prior to the Distribution Date, including under any providing for the sale of any such business, line of business, facility or real property; |
| • | all liabilities described on a schedule to the Separation Agreement; |
| • | any liability for taxes expressly transferred to, or retained by, SpinCo or any Transferred Subsidiary designated by SpinCo pursuant to the Tax Matters Agreement as more fully described in the section of this proxy statement entitled ‘‘Other Agreements—Tax Matters Agreement; |
| • | any warranty, product liability obligation or claim or similar obligation entered into, created or incurred in the course of GE Transportation with respect to its products or services, whether prior to, at or after the Distribution Effective Time; |
| • | all liabilities allocated to SpinCo or any Transferred Subsidiary under the Transaction Documents; |
| • | all liabilities to the extent arising under the allocated portion of any contract entered into prior to the Distribution Effective Time to which GE, SpinCo or any Transferred Subsidiary is a party that relates to both (i) GE Transportation and (ii) any other GE business (each a ‘‘shared contract’’) that is assigned to a member of SpinCo or any Transferred Subsidiary under the Separation Agreement; |
| • | all liabilities relating to any transferred notes listed on a schedule to the Separation Agreement; and |
| • | all liabilities to the extent related to (i) indebtedness of SpinCo any SpinCo Transferred Subsidiary (excluding any liabilities solely among SpinCo and any SpinCo Transferred Subsidiaries or among SpinCo Transferred Subsidiaries) (to the extent taken into account in the determination the debt adjustment as more fully described below under ‘‘—Cash, Debt and Receivables Adjustment’’), (ii) indebtedness of any Direct Sale Transferred Subsidiaries (excluding any liabilities solely between Direct Sale Transferred Subsidiaries) (to the extent taken into account in the determination the debt adjustment as more fully described below under ‘‘—Cash, Debt and Receivables Adjustment’’) or (iii) the debt financing completed by the Commitment Letter (see the section of this proxy statement entitled ‘‘Debt Financing’’). |
| • | any liability to the extent relating to any Excluded Asset; |
| • | any liability expressly retained by, or transferred to, GE or any of its subsidiaries that is not SpinCo or a Transferred Subsidiary pursuant to the Employee Matters Agreement as more fully described in the section of this proxy statement entitled ‘‘Other Agreements—Employee Matters Agreement or the Tax Matters Agreement as more fully described in the section of this proxy statement entitled ‘‘Other Agreements—Tax Matters Agreement;’’ |
| • | other than (i) intercompany accounts payable exclusively between or among GE and its subsidiaries on behalf of GE Transportation (and not any other GE business) and (ii) surviving intercompany accounts |
| • | all liabilities, whether presently in existence or arising after the date of the Separation Agreement, relating to fees, commissions or expenses owed to any broker, finder, investment banker, accountant, attorney or other intermediary or advisor employed by GE or any of its subsidiaries that is not a Transferred Subsidiary or, to the extent the relevant engagement was entered into prior to the closing of the Transactions, SpinCo or any Transferred Subsidiary in connection with the transactions contemplated by the Separation Agreement or the Transaction Documents (other than, for the avoidance of doubt, to the extent otherwise provided in any Transaction Document); |
| • | all Liabilities to the extent relating to (i) the conduct and operation of any GE business other than GE Transportation (including, to the extent relating any GE business other than GE Transportation, any liability relating to, arising out of or resulting from any act or failure to act by any representatives of GE or any of its subsidiaries that is not a Transferred Subsidiary (whether or not such act or failure to act is or was within such person or entity’s authority)) or (ii) any warranty, product liability obligation or claim or similar obligation entered into, created or incurred in the course of any GE business other than GE Transportation with respect to its products or services, whether prior to, at or after the Distribution Effective Time; |
| • | all liabilities to the extent arising under the allocated portion of any shared contract that is assigned to GE or any of its subsidiaries that is not a Transferred Subsidiary in accordance with the Separation Agreement; |
| • | all liabilities of GE or any of its subsidiaries that is not a Transferred Subsidiary under the Transaction Documents; and |
| • | all fines or penalties imposed by any governmental authority relating to the matter set forth on a schedule to the Separation Agreement to the extent relating to filings made by GE prior to the Distribution Effective Time. |
| • | ‘‘Direct Sale Cash Amount’’ means, whether positive or negative, as of any time, the aggregate amount of cash and cash equivalents held by any Direct Sale Transferred Subsidiary (in each case other than restricted cash held by any Direct Sale Transferred Subsidiary), including the amount of any checks and drafts (including both written and electronic fund transfer orders) (i) received by any Direct Sale Transferred Subsidiary but not yet deposited and (ii) deposited for the account of any Direct Sale Transferred Subsidiary but not yet cleared as of immediately prior to the consummation of the Direct Sale (but only to the extent actually cleared after such time), except that the value of any cash and cash equivalents held in non-U.S. jurisdictions will be determined in accordance with the accounting principles listed on a schedule to the Separation Agreement. The Direct Sale Cash Amount will be reduced by an amount equal to any cut but uncashed checks as of immediately prior to the consummation of the Direct Sale (to the extent that such cut but uncashed checks are drawn from bank accounts that are included in the Direct Sale Assets or which obligations otherwise constitute Direct Sale Liabilities). |
| • | ‘‘Direct Sale Indebtedness’’ means, without duplication, any indebtedness of any Direct Sale Transferred Subsidiary, excluding any liabilities solely between Direct Sale Transferred Subsidiaries. |
| • | ‘‘Direct Sale Adjustment Amount’’ means, whether positive or negative, an amount equal to Direct Sale Closing Cash (as finally determined in accordance with the provisions above) minus Direct Sale Closing Indebtedness (as finally determined in accordance with the provisions above). |
| • | ‘‘SpinCo Cash Amount’’ means, whether positive or negative, as of any time, the aggregate amount of cash and cash equivalents held by SpinCo or any SpinCo Transferred Subsidiary (in each case other than restricted cash held by SpinCo or any SpinCo Transferred Subsidiary), including the amount of any checks and drafts (including both written and electronic fund transfer orders) (i) received by SpinCo or any SpinCo Transferred Subsidiary but not yet deposited and (ii) deposited for the account of SpinCo or any SpinCo Transferred Subsidiary but not yet cleared as of immediately prior to the Distribution Effective Time (but only to the extent actually cleared after such time), except that the value of any cash and cash equivalents held in non-U.S. jurisdictions will be determined in accordance with the accounting principles listed on a schedule to the Separation Agreement. The SpinCo Cash Amount will be reduced by an amount equal to any cut but uncashed checks as of immediately prior to the Distribution Effective Time (to the extent that such cut but uncashed checks are drawn from bank accounts that are included in the SpinCo Assets or which obligations otherwise constitute SpinCo Liabilities). |
| • | ‘‘SpinCo Indebtedness’’ means, without duplication, any indebtedness of SpinCo or any SpinCo Transferred Subsidiary, excluding any liabilities solely between SpinCo and any SpinCo Transferred Subsidiaries or between SpinCo Transferred Subsidiaries. |
| • | ‘‘Excess Factored Customer Receivables’’ means the excess, if any, of (i) the amount of Factored Customer Receivables (as defined below) over (ii) the lesser of (A) $180,000,000 and (B) (1) 60%, multiplied by (2) the Gross Customer Receivables (as defined below). |
| • | ‘‘Factored Customer Receivables’’ means any Gross Customer Receivables that as of the Distribution Effective Time have been sold to a third party, including General Electric Working Capital Solutions, |
| • | ‘‘Gross Customer Receivables’’ means any amounts billed by GE Transportation to customers for the sale and delivery of goods and services that have not yet been collected as of the Distribution Effective Time, as determined in a manner consistent with the historical accounting practices of GE Transportation. |
| • | ‘‘SpinCo Adjustment Amount’’ means, whether positive or negative, an amount equal to (i) SpinCo Closing Cash (as finally determined in accordance with the provisions above) minus (ii) SpinCo Closing Indebtedness Cash (as finally determined in accordance with the provisions above) minus (iii) Excess Factored Customer Receivables (as finally determined in accordance with the provisions above), if any. |
| • | any insurance proceeds or third-party proceeds actually received by or on behalf of the applicable indemnitee corresponding to any such indemnifiable loss, in each case net of the costs of collection of such indemnifiable loss and any increase in premium attributable thereto, and, in the case of any insurance proceeds, net of any applicable deductible or retention; and |
| • | any tax benefit actually realized by the applicable indemnitee arising from the incurrence or payment of any such indemnifiable loss (determined on a ‘‘with and without’’ basis and by treating the loss or deduction (or a carryforward thereof) attributable to such indemnifiable loss as the last item taken into account in determining the applicable indemnitee’s tax liability). |
| • | no indemnitee will be entitled to payment or indemnification more than once with respect to the same matter; and |
| • | no party will have any right to set off any losses (including indemnifiable losses) against any payments to be made by any such party under any other agreement between the parties, including the Transaction Documents. |
| • | except as permitted under the Separation Agreement and the Trademark License Agreement, (A) cease all use of any of the GE Names and Marks on or in connection with all stationery, business cards, purchase orders, lease agreements, warranties, indemnifications, invoices and other similar correspondence and other documents of a contractual nature and (B) complete the removal of the GE Names and Marks from all product, services and technical information promotional brochures prior to expiration of the Trademark License Agreement; |
| • | with respect to assets or SpinCo Assets bearing any GE Names and Marks, use their commercially reasonable efforts to relabel such assets or SpinCo Assets or remove such GE Names and Marks from such assets or SpinCo Assets as promptly as practicable, and in any event prior to the expiration of the Trademark License Agreement; |
| • | not, expressly or by implication, do business as or represent themselves as GE or any of its affiliates; |
| • | with respect to assets managed, operated or leased after the Distribution Date, represent in writing to the owners or lessors of such assets that such assets are those of SpinCo and its affiliates and not those of GE and its affiliates; |
| • | except to the extent otherwise provided in the Trademark License Agreement, cooperate with GE and its affiliates in terminating any contracts pursuant to which GE or any of its subsidiaries that is not a Transferred Subsidiary or SpinCo or any of the Transferred Subsidiaries license any GE Names and Marks to customers in connection with GE Transportation; |
| • | take all necessary action to ensure that other users of any GE Names and Marks, whose rights terminate upon the Distribution Effective Time pursuant to the provisions of the Separation Agreement described above, will cease use of the GE Names and Marks, except as expressly authorized thereafter by GE. |
| • | except as contemplated by the Trademark License Agreement, promptly after the Distribution Date, but in any event no later than 10 business days after the Distribution Date, make all filings with any and all offices, agencies and bodies and take all other actions necessary to adopt new corporate names, registered names, and registered fictitious names of SpinCo and the Transferred Subsidiaries and their respective affiliates that do not consist in whole or in part of, and are not dilutive of or confusingly similar to, the GE Names and Marks (‘‘new corporate names’’), and upon receipt of confirmation from the appropriate registry that such name changes have been effected, provide GE with written proof that such name changes have been effected; and |
| • | use best efforts to adopt new corporate names as soon as possible after the Distribution Effective Time. |
| • | SpinCo and the Transferred Subsidiaries (A) will be solely responsible for notifying any and all insurance companies of such claims and complying with all policy terms and conditions for pursuit and collection of such claims; (B) will not, without the written consent of GE, amend, modify or waive any rights of GE or other insureds under any such insurance policies and programs; and (C) will exclusively bear and be liable (and the GE will have no obligation to repay or reimburse SpinCo or any Transferred Subsidiary) for all uninsured, uncovered, unavailable or uncollectible amounts relating to or associated with all such claims. |
| • | With respect to coverage claims or requests for benefits asserted by SpinCo and the Transferred Subsidiaries under the insurance policies listed on a schedule to the Separation Agreement as described in subclause (iii) above, GE will have the right but not the duty to monitor and/or associate with such claims its sole cost and expense. SpinCo and the Transferred Subsidiaries will be liable for any fees, costs and expenses reasonably incurred by GE directly or indirectly through the insurers or reinsurers of the under the insurance policies listed on a schedule to the Separation Agreement as described in subclause (iii) above relating to any unsuccessful coverage claims pursued at SpinCo’s written request. SpinCo and the Transferred Subsidiaries will not assign any under the insurance policies listed on a schedule to the Separation Agreement as described in subclause (iii) of the first paragraph of this section or any rights or claims under such policies. |
| • | nothing in the Separation Agreement will limit, waive or abrogate in any manner any rights of GE to insurance coverage for any matter, whether relating to SpinCo or any Transferred Subsidiary or otherwise; and |
| • | GE will retain the exclusive right to control the GE insurance policies, including the right to exhaust, settle, release, commute, buy-back or otherwise resolve disputes with respect to any GE insurance policies and to amend, modify or waive any rights under any such GE insurance policies, notwithstanding whether any such GE insurance policies apply to any liabilities or losses as to which SpinCo or any Transferred Subsidiary has made, or could in the future make, a claim for coverage; provided, that SpinCo and the Transferred Subsidiaries will cooperate with GE with respect to coverage claims and requests for benefits and sharing such information as is reasonably necessary in order to permit GE to manage and conduct its insurance matters as it deems appropriate. |
| • | nonpayment of principal, interest, fees or other amounts; |
| • | nonpayment of other material indebtedness; |
| • | non-compliance with loan documents, including violation of any covenants in the Credit Agreement; |
| • | inaccuracy of representations and warranties; |
| • | ERISA events; |
| • | material judgments; |
| • | actual or asserted invalidity of any loan documents; |
| • | change of control; and |
| • | bankruptcy, insolvency, or inability or refusal to pay debts as they become due. |
| • | appear or otherwise cause their covered shares to be counted as present for purposes of calculating a quorum; and |
| • | vote (or cause to be voted), in person or by proxy, all of their covered shares: |
| • | in favor of the Share Issuance, the Wabtec Charter Amendment and any related action reasonably requested by GE; |
| • | against any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of Wabtec in the Merger Agreement or of such stockholder in the Voting Agreement; and |
| • | against any Acquisition Proposal or Superior Proposal and against any other action, agreement or transaction involving Wabtec or its subsidiaries that would reasonably be expected to materially impede, interfere with, delay, postpone, adversely affect or otherwise materially adversely affect or prevent the consummation of the Merger or the other transactions contemplated by the Merger Agreement or the performance by Wabtec of its obligations under the Merger Agreement or by such stockholder of its obligations under the Voting Agreement. |
| • | enter into agreement or take any action that violates or conflicts with (or would reasonably be expected to do the same) such stockholder’s representations, warranties, covenants and obligations under the Voting Agreement, or |
| • | take any action that could restrict or otherwise affect such stockholder’s legal power, authority and right to comply with and perform its covenants and obligations under the Voting Agreement. |
| • | acquire (or offer or agree to do the same) beneficial ownership of Wabtec common stock or any other security of Wabtec other than equity securities of Wabtec issued or issuable directly or indirectly with respect to or on account of the Initial Shares; |
| • | make any statement or proposal to Wabtec or its stockholders regarding, or make any public announcement, proposal or offer or otherwise solicit or effect (whether directly or indirectly, publicly or otherwise): |
| • | any business combination, merger, tender offer, exchange offer or similar transaction involving Wabtec or any of its subsidiaries that may reasonably be expected to result in a change of control; |
| • | any restructuring, recapitalization, liquidation, dissolution or similar transaction involving Wabtec or any of its subsidiaries, including any material divestiture, break-up or spinoff; |
| • | any acquisition of any equity securities of Wabtec or any of its subsidiaries or rights or options to acquire the same; or |
| • | the composition of or election of any individual to the Wabtec Board; |
| • | enter into any discussions, negotiations, arrangements or understandings with respect to the foregoing, or form, join or participate in a ‘‘group’’ with respect to Wabtec common stock in connection with any of the forgoing; |
| • | request, call or seek to call a meeting of Wabtec stockholders, nominate any individual for election to the Wabtec Board at any meeting of stockholders, submit any stockholder proposal to seek |
| • | deposit any subject shares or any other Wabtec common stock in a voting trust or similar arrangement or subject such shares to any voting agreement, pooling arrangement or similar arrangement; or |
| • | take any action which would reasonably be expected to require Wabtec to make a public announcement regarding any of the foregoing. |
| • | GE generally will be responsible for (i) taxes of SpinCo and its subsidiaries, and taxes imposed on or in respect of the assets sold and the liabilities assumed pursuant to the Direct Sale, in each case, for tax periods (or portions thereof) ending on or before the Distribution Date, (ii) taxes arising with respect to the failure of the Distribution to qualify as a tax-free distribution to the GE stockholders pursuant to Section 355(a) of the Code or the failure of any of certain aspects of the Internal Reorganization to qualify for their intended tax-free treatment (except in certain cases where such tax liability arises (x) as a result of actions or failures to act, or breaches of the Tax Matters Agreement, by Wabtec, SpinCo or their subsidiaries, or (y) with respect to the assets of Wabtec, SpinCo or their subsidiaries, that affect, in each case, the intended tax treatment of the Distribution or Internal Reorganization), (iii) 100% of applicable transfer taxes relating to the Internal Reorganization and the SpinCo Transfer and 50% of other applicable transfer taxes, and (iv) taxes (other than transfer taxes) arising from the application of Section 355(e) of the Code to the Distribution and the making of elections under Section 336(e) of the Code with respect to the Distribution; and |
| • | Wabtec and SpinCo generally will be responsible for (i) taxes of SpinCo and its subsidiaries, and taxes imposed on or in respect of the assets sold and the liabilities assumed pursuant to the Direct Sale, in each case, for tax periods (or portions thereof) ending after the Distribution Date, (ii) taxes arising (x) as a result of actions or failures to act, or breaches of the Tax Matters Agreement, by Wabtec, SpinCo or their subsidiaries, or (y) with respect to the assets of Wabtec, SpinCo or their subsidiaries, and affecting, in each case, the intended tax treatment of the Distribution or the Internal Reorganization, and (iii) 50% of applicable transfer taxes (except for transfer taxes relating to the Internal Reorganization and the SpinCo Transfer). |
| • | cause or permit the cessation of the active conduct of certain of SpinCo’s businesses, dispose of interests in any entity conducting such businesses, or change the U.S. tax classification of any such entity; |
| • | redeem or repurchase any stock or stock rights of Wabtec, other than in certain open-market transactions; or |
| • | merge, consolidate or amalgamate with any other person (other than pursuant to the Merger or mergers, consolidations or amalgamations in which SpinCo or Wabtec, as relevant, is the surviving party). |
| • | GE will grant to SpinCo and its subsidiaries a non-exclusive, irrevocable, royalty-free, fully paid-up, worldwide, non-sublicensable and non-transferable (except as described below), perpetual right and license to use certain specified GE software solely as used (or contemplated to be used) by GE Transportation as of the date of the IP Cross License Agreement. The IP Cross License Agreement also prohibits marketing or reselling any element of such GE software; |
| • | GE will grant to SpinCo and its subsidiaries a non-exclusive, irrevocable, royalty-free, fully paid-up, worldwide, non-sublicensable and non-transferable (except as described below), perpetual right and license to use, improve, and commercialize certain specified GE intellectual property, GE technology, and GE data (collectively, the ‘‘Specified GE Licensed Items’’) as used (or contemplated to be used) by GE Transportation as of the date of the IP Cross License Agreement, subject to certain restrictions; |
| • | GE will grant to SpinCo and its subsidiaries a non-exclusive, irrevocable, royalty-free, fully paid-up, worldwide, non-sublicensable and non-transferable (except as described below), perpetual right and license allowing SpinCo to use certain specified GE materials and create and develop improvements thereto; and |
| • | The licenses permit sublicensing to (i) an acquirer of all or substantially all of the assets of SpinCo and its subsidiaries to which the IP Cross License Agreement relates or (ii) customers or end-users in connection with products or services provided in substantially the same manner that such sublicenses were granted as of the Distribution Date. |
| • | SpinCo will grant to GE and its affiliates a non-exclusive, irrevocable, royalty-free, fully paid-up, worldwide, non-sublicensable and non-transferable (except as described below), perpetual right and license to use certain specified SpinCo software, subject to certain restrictions; |
| • | SpinCo will grant to GE and its affiliates a non-exclusive, irrevocable, royalty-free, fully paid-up, worldwide, non-sublicensable and non-transferable (except as described below), perpetual right and license to use, improve, and commercialize certain specified SpinCo intellectual property, SpinCo technology and SpinCo data (collectively, the ‘‘Specified SpinCo Licensed Items’’) subject to certain restrictions; and |
| • | The licenses permit sublicensing to an acquirer of any of the businesses, a line of business, or all or substantially all of the operations or assets of GE or such affiliates to which the IP Cross License Agreement relates. |
| • | the Wabtec Board is classified into three classes, with one class elected each year to serve a three-year term; |
| • | the Wabtec Bylaws require the Nominating and Corporate Governance Committee to nominate (a) William E. Kassling (so long as Mr. Kassling is able and willing to serve and members of his immediate family and their affiliates collectively and beneficially own at least 50% of the shares of |
| • | except as otherwise provided by applicable law, the Wabtec Charter or the Wabtec Bylaws may be altered, amended or repealed by the stockholders at any annual or special meeting or by action of the Wabtec Board; |
| • | special meetings of the stockholders may be called at any time by the Chairman of the Wabtec Board, the Chief Executive Officer, a majority of the Wabtec Board or stockholders owning not less than 25% of the capital stock of Wabtec’s issued and outstanding capital stock entitled to vote and may not be called by any other person or persons or in any other manner; and |
| • | stockholders must provide advance notice if they wish to submit a proposal or nominate candidates for director at Wabtec’s annual meeting of stockholders. |
| • | the approval by Wabtec stockholders of the Share Issuance; |
| • | the approval by Wabtec stockholders of the Wabtec Charter Amendment; |
| • | the termination or expiration of the applicable waiting period under the HSR Act; |
| • | the taking, making or obtaining of all material actions by, consents or approvals of, or in respect of or filings with any governmental authority required to permit the Transactions; |
| • | the effectiveness under the Securities Act of (i) SpinCo’s registration statement on Form 10 or such Form(s) as shall be required under applicable SEC rules in connection with the Distribution and (ii) Wabtec’s registration statement on Form S-4 in connection with the Merger, and, in each case, the absence of any stop order issued by the SEC or any pending proceeding before the SEC seeking a stop order with respect thereto; |
| • | the receipt of the GE Tax Opinions and the Wabtec Tax Opinion by GE and Wabtec, respectively; |
| • | the receipt of the Direct Sale Purchase Price by GE; |
| • | the completion of the various transaction steps contemplated by the Merger Agreement and the Separation Agreement, including the International Reorganization, the Direct Sale, the SpinCo Transfer and the Distribution; and |
| • | other customary conditions. |
| • | integrating GE Transportation while carrying on the ongoing operations of Wabtec’s business; |
| • | managing a significantly larger company than before the consummation of the Transactions; |
| • | the possibility of faulty assumptions underlying Wabtec’s expectations regarding the integration process; |
| • | coordinating a greater number of diverse businesses located in a greater number of geographic locations; |
| • | operating in geographic markets or industry sectors in which Wabtec may have little or no experience; |
| • | complying with laws of new jurisdictions in which Wabtec has not previously operated; |
| • | integrating business systems and models; |
| • | attracting and retaining the necessary personnel associated with GE Transportation following the consummation of the Transactions; |
| • | creating and implementing uniform standards, controls, procedures, policies and information systems and controlling the costs associated with such matters; and |
| • | integrating information technology, purchasing, accounting, finance, sales, billing, payroll and regulatory compliance systems, and meeting external reporting requirements following the consummation of the Transactions. |
| • | difficulties in achieving identified financial and operating synergies, including the integration of operations, services and products; |
| • | diversion of management’s attention from other business concerns; |
| • | the assumption of unknown liabilities; and |
| • | unanticipated changes in the market conditions, business and economic factors affecting such an acquisition, joint venture or alliance. |
| • | lack of complete operating control; |
| • | lack of local business experience; |
| • | currency exchange fluctuations and devaluations; |
| • | restrictions on currency conversion or the transfer of funds or limitations on Wabtec’s ability to repatriate income or capital; |
| • | the complexities of operating within multiple tax jurisdictions; |
| • | foreign trade restrictions and exchange controls; |
| • | adverse impacts of international trade policies, such as import quotas, capital controls or tariffs; |
| • | difficulty enforcing agreements and intellectual property rights; |
| • | the challenges of complying with complex and changing, laws regulations and policies of foreign governments; |
| • | the difficulties involved in staffing and managing widespread operations; |
| • | the potential for nationalization of enterprises; |
| • | economic, political and social instability; and |
| • | possible terrorist attacks, conflicts and wars, including those against American interests. |
| • | increase Wabtec’s vulnerability to general adverse economic and industry conditions; |
| • | require Wabtec to dedicate a substantial portion of its cash flow from operations to payments on its indebtedness, thereby reducing the availability of its cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes; |
| • | limit Wabtec’s flexibility in planning for, or reacting to, changes in its business and the industries in which it operate; |
| • | place Wabtec at a disadvantage compared to competitors that have less debt; and |
| • | limit Wabtec’s ability to borrow additional funds. |
| • | the uncertainty that an acquired business will achieve anticipated operating results; |
| • | significant expenses to integrate; |
| • | diversion of management’s attention; |
| • | departure of key personnel from the acquired business; |
| • | effectively managing entrepreneurial spirit and decision-making; |
| • | integration of different information systems; |
| • | unanticipated costs and exposure to unforeseen liabilities; and |
| • | impairment of assets. |
| 1. | To authorize the issuance of shares of Wabtec common stock in the Merger (the ‘‘Share Issuance’’). |
| 2. | To amend the Wabtec Charter to increase the number of authorized shares of common stock from 200 million to 500 million (the ‘‘Wabtec Charter Amendment’’). |
| 3. | If it is determined by the board of directors to be necessary or appropriate, to approve adjournments or postponements of the special meeting to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Share Issuance and the Wabtec Charter Amendment. |
| 1. | ‘‘FOR’’ the proposal to issue shares of Wabtec common stock in the Merger (the ‘‘Share Issuance’’); |
| 2. | ‘‘FOR’’ the proposal to amend the Wabtec Charter to increase the number of authorized shares of common stock from 200 million to 500 million (the ‘‘Wabtec Charter Amendment’’); and |
| 3. | If it is determined by the board of directors to be necessary or appropriate, ‘‘FOR’’ the approval of adjournments or postponements of the special meeting to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the Share Issuance and the Wabtec Charter Amendment. |
| • | Vote by Internet, by going to the website address on your proxy card or voting instruction form and following the instructions for Internet voting shown on the website. |
| • | Vote by Telephone, by dialing the toll-free number on your proxy card or voting instruction form and following the instructions for telephone voting shown on the proxy card or voting instruction form. |
| • | Vote by Proxy Card, by completing, signing, dating and mailing a proxy card or voting instruction form in the envelope provided. |
| • | Attached to your proxy card; |
| • | Can be printed from the online voting site; or |
| • | A letter or a recent account statement showing your ownership of Wabtec common stock as of the record date, if you hold shares through a bank, broker or other nominee. |
| • | Increased Scale and Diversification of Wabtec’s Product Portfolio with Focus on Transportation Industry. As a result of the Transactions, Wabtec expects the combined business to be one of the world’s largest providers of technology-enabled equipment, systems and services for the locomotive, freight and passenger rail industries with approximately $8.0 billion in revenue and 25,000 employees in 52 countries. |
| • | Complementary Digital Technologies. GE Transportation will contribute a comprehensive digital portfolio and leading engineering and technical intellectual property to Wabtec, providing electronics and digital technologies that position the combined company to meet growing demand for train intelligence and network optimization. |
| • | Enhanced Aftermarket and Services Opportunities. The combined entity will have an installed base of over 22,500 locomotives and content on virtually all North American locomotives and freight cars, which enables significant opportunities in the high-margin aftermarket parts and services business and mitigates the combined company’s exposure to cycles. |
| • | Significant Operating Synergies. The consummation of the Transactions is expected to generate $250.0 million total run-rate operating synergies, driven by cost and revenue opportunities, within four years after closing. |
| • | Improved Financial Profile. The consummation of the Transactions will enhance Wabtec’s margins and revenue growth opportunities with strong free cash flow generation to enable strategic deleveraging. The combination is also expected to generate a net tax benefit of approximately $1.1 billion over the next 15 years. |
| • | Equipment (45% of 2017 total revenue): GE Transportation is the largest global manufacturer of diesel-electric locomotives used by freight railroads, and produces electric motors and premium propulsion systems for mining, marine, stationary power and drilling applications. |
| • | Services (48% of 2017 total revenue): GE Transportation provides aftermarket parts and services to its global installed base, including predictive maintenance, regular maintenance, and unscheduled maintenance and overhaul services for locomotives. |
| • | Digital (7% of 2017 total revenue): GE Transportation provides a comprehensive suite of software-enabled solutions designed to improve customer efficiency and productivity in the transportation and mining industries. |
|
Focus Area
|
Train
Performance |
Transport Intelligence
|
Transport
Logistics |
Network Optimization
|
Digital Mine
|
|
Key Attributes
|
• Distributed
locomotive power • Train ‘cruise control’ • Train remote control |
• Industrial/mobile
Internet of Things (IoT) hardware & software • Edge-to-cloud, on and off-board analytics & rules • Asset performance management |
• Rail transportation
management • Shipper transportation management • Port visibility and optimization |
• Rail network scheduling,
dispatch, and optimization • Intermodal terminal management and optimization • Rail yard management and optimization |
• Safety systems
• Operations performance management (OPM) • Asset performance management (APM) |
|
Key Customer Benefits
|
• Longer, heavier
trains • 90+% reduction in ‘break-in-twos’ • 7-13% fuel savings, lower emissions • Decrease manpower for yard shunting, mainline |
• Asset reliability /
decreased maintenance cost • Decreased operating costs • Lower spend for IoT management & analytics |
• Freight visibility
across entities • Meaningful increase in port efficiency • Improved back-office and day of operation processes • Reduced revenue leakage |
• Faster, more
efficient rail networks • Reduced dwell / higher throughput |
• Collision
avoidance • Higher blast yields • Higher asset reliability / decreased maintenance cost |
|
Location
|
Approximate
Square Feet |
Owned/Leased
|
|
Office Space
|
||
|
Chicago, IL
|
53,972
|
Leased
|
|
Manufacturing Facilities
|
||
|
Fort Worth, TX – Locomotive
|
923,266
|
Owned
|
|
Fort Worth, TX – Off-Highway Vehicle
|
249,700
|
Owned
|
|
Erie, PA – Manufacturing, Engineering, and Testing
|
4,200,000
|
Owned
|
|
Grove City, PA – Engine Remanufacturing
|
242,000
|
Owned
|
|
Grove City, PA – Main Engine
|
486,000
|
Owned
|
|
Contagem, Minas Gerais, Brazil
|
114,452
|
Leased
|
| • | Equipment segment: GE Transportation’s Equipment segment is a leading manufacturer of diesel-electric locomotives serving freight and passenger railroads. GE Transportation produces products and solutions that help railroads reduce operating costs, decrease fuel use, minimize downtime and comply with stringent emissions standards. In addition to locomotives, GE Transportation also produces a range of engines, electric motors and premium propulsion systems used in mining, marine, stationary power and drilling applications. |
| • | Services segment: GE Transportation’s Services segment is responsible for supporting railroads in the operation of their fleet of GE Transportation locomotives in an efficient manner throughout their entire lifecycle in terms of safety, availability, reliability and economic performance. GE Transportation provides aftermarket parts and services to GE Transportation’s global installed base, including predictive maintenance, regular maintenance, and unscheduled maintenance and overhaul services for locomotives. GE Transportation’s offerings include supply of parts, technical support and locomotive modernizations. Commercially, locomotive maintenance can be contracted on a fully transactional basis or through multi-year contracts (Contractual Service Agreements or ‘‘CSAs’’), where GE Transportation assumes certain service activities, and the related performance risks, in return for fixed and variable payments based on underlying utilization of the asset(s) covered. |
| • | Digital segment: GE Transportation’s Digital segment combines a history of industrial leadership with cutting-edge data science and analytics acumen to create an efficient, productive and reliable digital-rail ecosystem, from mine to port, from shipper to receiver, from port to intermodal terminals to main line locomotives and railcars and across train yards and operation centers. GE Transportation’s Digital segment develops and works with GE Transportation’s customers to implement a comprehensive set of |
| • | Sales (costs) of goods: Goods primarily consists of GE Transportation’s Equipment segment, as well as part sales in GE Transportation’s Services segment and some Digital segment products. Specifically, goods consist of locomotives, locomotive parts, modernizations, marine, stationary and drilling apparatuses and parts, mining equipment and parts, and digital equipment. |
| • | Sales (costs) of services: Services primarily consists of GE Transportation’s Services segment, as well as some Digital segment products. Sales and costs of services consists of maintenance services, marine, stationary and drilling services, mining services, and digital services. |
| • | Operating income: The term ‘‘operating income’’ is used in this ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations for GE Transportation’’ and in the combined financial statements of GE Transportation and the notes thereto. This term is defined as Gross profit less Selling, general and administrative expenses. |
|
For the Six Months Ended June 30
|
||||
|
2018
|
2017
|
Variation ($)
|
Variation (%)
|
|
|
In thousands, except for percentages
|
||||
|
Income Statement Data:
|
||||
|
Revenues
|
||||
|
Sales of goods
|
$1,101,781
|
$1,312,160
|
$(210,379)
|
(16)%
|
|
Sales of services
|
672,107
|
668,425
|
3,682
|
1%
|
|
Total revenues
|
1,773,888
|
1,980,585
|
(206,697)
|
(10)%
|
|
Cost of revenues
|
||||
|
Cost of goods sold
|
881,336
|
1,116,321
|
(234,985)
|
(21)%
|
|
Cost of services sold
|
405,955
|
446,245
|
(40,290)
|
(9)%
|
|
Gross profit
|
486,597
|
418,019
|
68,578
|
16%
|
|
Selling, general and administrative expenses
|
264,770
|
228,713
|
36,057
|
16%
|
|
Impairment of goodwill
|
—
|
—
|
—
|
|
|
Non-operating benefit costs
|
5,155
|
11,262
|
(6,107)
|
(54)%
|
|
Other (expense) income
|
(4,362)
|
(20,961)
|
16,599
|
(79)%
|
|
Earnings before income taxes
|
212,310
|
157,083
|
55,227
|
35%
|
|
Provision for income taxes
|
(44,084)
|
(56,984)
|
12,900
|
(23)%
|
|
Net earnings
|
168,226
|
100,099
|
68,127
|
68%
|
|
Less net earnings attributable to noncontrolling interests
|
4,136
|
6,811
|
(2,675)
|
(39)%
|
|
Net earnings attributable to GE
|
$164,090
|
$93,288
|
$70,802
|
76%
|
|
Other comprehensive (loss) income
|
||||
|
Foreign currency translation adjustments
|
(20,849)
|
20,078
|
(40,927)
|
(204)%
|
|
Benefit plans, net of taxes
|
2,173
|
772
|
1,401
|
181%
|
|
Other comprehensive (loss) income, net of taxes
|
(18,676)
|
20,850
|
(39,526)
|
(190)%
|
|
Less other comprehensive income (loss) attributable to noncontrolling interests
|
(2,400)
|
1,331
|
(3,731)
|
(280)%
|
|
Other comprehensive (loss) income attributable to GE
|
(16,276)
|
19,519
|
(35,795)
|
(183)%
|
|
Comprehensive income (loss)
|
149,550
|
120,949
|
28,601
|
24%
|
|
Less comprehensive income (loss) attributable to noncontrolling interests
|
1,736
|
8,142
|
(6,406)
|
(79)%
|
|
Comprehensive income attributable to GE
|
$147,814
|
$112,807
|
$35,007
|
31%
|
|
For the Year Ended December 31
|
||||
|
2017
|
2016
|
Variation ($)
|
Variation (%)
|
|
|
In thousands, except for percentages
|
||||
|
Income Statement Data:
|
||||
|
Revenues
|
||||
|
Sales of goods
|
$2,546,637
|
$3,046,546
|
$(499,909)
|
(16)%
|
|
Sales of services
|
1,383,671
|
1,560,045
|
(176,374)
|
(11)%
|
|
Total revenues
|
3,930,308
|
4,606,591
|
(676,283)
|
(15)%
|
|
Cost of revenues
|
||||
|
Cost of goods sold
|
2,129,684
|
2,525,838
|
(396,154)
|
(16)%
|
|
Cost of services sold
|
877,390
|
909,116
|
(31,726)
|
(3)%
|
|
Gross profit
|
923,234
|
1,171,637
|
(248,403)
|
(21)%
|
|
Selling, general and administrative expenses
|
449,651
|
432,229
|
17,422
|
4%
|
|
Impairment of goodwill
|
—
|
2,027
|
(2,027)
|
(100)%
|
|
Non-operating benefit costs
|
16,877
|
18,455
|
(1,578)
|
(9)%
|
|
Other (expense) income
|
(24,307)
|
(11,409)
|
(12,898)
|
113%
|
|
Earnings before income taxes
|
432,399
|
707,517
|
(275,118)
|
(39)%
|
|
Provision for income taxes
|
(44,303)
|
(167,428)
|
123,125
|
(74)%
|
|
Net earnings
|
388,096
|
540,089
|
(151,993)
|
(28)%
|
|
Less net earnings attributable to noncontrolling interests
|
14,311
|
6,144
|
8,167
|
133%
|
|
Net earnings attributable to GE
|
373,785
|
533,945
|
(160,160)
|
(30)%
|
|
Other comprehensive income (loss)
|
||||
|
Foreign currency translation adjustments
|
15,568
|
22,970
|
(7,402)
|
(32)%
|
|
Benefit plans, net of taxes
|
459
|
(1,092)
|
1,551
|
(142)%
|
|
Other comprehensive income (loss), net of taxes
|
16,027
|
21,878
|
(5,851)
|
(27)%
|
|
Less other comprehensive income (loss) attributable to noncontrolling interests
|
703
|
(6,101)
|
6,804
|
(112)%
|
|
Other comprehensive income (loss) attributable to GE
|
15,324
|
27,979
|
(12,655)
|
(45)%
|
|
Comprehensive income (loss)
|
404,123
|
561,967
|
(157,844)
|
(28)%
|
|
Less comprehensive income (loss) attributable to noncontrolling interests
|
15,014
|
43
|
14,971
|
34,816%
|
|
Comprehensive income attributable to GE
|
$389,109
|
$561,924
|
(172,815)
|
(31)%
|
|
For the Year Ended December 31
|
||||
|
2016
|
2015
|
Variation ($)
|
Variation (%)
|
|
|
In thousands, except for percentages
|
||||
|
Income Statement Data:
|
||||
|
Revenues
|
||||
|
Sales of goods
|
$3,046,546
|
$3,998,100
|
$(951,554)
|
(24)%
|
|
Sales of services
|
1,560,045
|
1,423,379
|
136,666
|
10%
|
|
Total revenues
|
4,606,591
|
5,421,479
|
(814,888)
|
(15)%
|
|
Cost of revenues
|
||||
|
Cost of goods sold
|
2,525,838
|
3,163,798
|
(637,960)
|
(20)%
|
|
Cost of services sold
|
909,116
|
931,745
|
(22,629)
|
(2)%
|
|
Gross profit
|
1,171,637
|
1,325,936
|
(154,299)
|
(12)%
|
|
Selling, general and administrative expenses
|
432,229
|
414,488
|
17,741
|
4%
|
|
Impairment of goodwill
|
2,027
|
85,421
|
(83,394)
|
(98)%
|
|
Non-operating benefit costs
|
18,455
|
16,249
|
2,206
|
14%
|
|
Other (expense) income
|
(11,409)
|
27,121
|
(38,530)
|
(142)%
|
|
Earnings before income taxes
|
707,517
|
836,899
|
(129,382)
|
(15)%
|
|
Provision for income taxes
|
(167,428)
|
(349,275)
|
181,847
|
(52)%
|
|
Net earnings
|
540,089
|
487,624
|
52,465
|
11%
|
|
Less net earnings attributable to noncontrolling interests
|
6,144
|
7,547
|
(1,403)
|
(19)%
|
|
Net earnings attributable to GE
|
533,945
|
480,077
|
53,868
|
11%
|
|
Other comprehensive income (loss)
|
||||
|
Foreign currency translation adjustments
|
22,970
|
(42,755)
|
65,725
|
(154)%
|
|
Benefit plans, net of taxes
|
(1,092)
|
120
|
(1,212)
|
(1,010)%
|
|
Other comprehensive income (loss), net of taxes
|
21,878
|
(42,635)
|
64,513
|
(151)%
|
|
Less other comprehensive income (loss) attributable to noncontrolling interests
|
(6,101)
|
3,194
|
(9,295)
|
(291)%
|
|
Other comprehensive income (loss) attributable to GE
|
27,979
|
(45,829)
|
73,808
|
(161)%
|
|
Comprehensive income (loss)
|
561,967
|
444,989
|
116,978
|
26%
|
|
Less comprehensive income (loss) attributable to noncontrolling interests
|
43
|
10,741
|
(10,698)
|
(100)%
|
|
Comprehensive income attributable to GE
|
$561,924
|
$434,248
|
$127,676
|
29%
|
|
For the Six Months
Ended June 30, |
For the Years Ended December 31,
|
||||
|
2018
|
2017
|
2017
|
2016
|
2015
|
|
|
In thousands
|
(in thousands of U.S. dollars)
|
||||
|
Cash flows - operating activities
|
|||||
|
Net earnings
|
$168,226
|
$100,099
|
$388,096
|
$540,089
|
$487,624
|
|
Less net earnings attributable to noncontrolling interests
|
4,136
|
6,811
|
14,311
|
6,144
|
7,547
|
|
Net earnings attributable to GE
|
164,090
|
93,288
|
373,785
|
533,945
|
480,077
|
|
Cash provided by (used for) operating activities
|
76,436
|
(34,120)
|
322,004
|
853,712
|
875,234
|
|
Cash provided by (used for) investing activities
|
(68,393)
|
(143,973)
|
(200,956)
|
(168,214)
|
(225,875)
|
|
Cash provided by (used for) financing activities
|
20,548
|
229,226
|
(171,062)
|
(625,586)
|
(622,770)
|
|
Effect of currency exchange rate changes on cash and equivalents
|
(2,413)
|
10,139
|
4,201
|
4,133
|
(7,784)
|
|
Increase in cash and equivalents
|
26,178
|
61,272
|
(45,813)
|
64,045
|
18,805
|
|
Cash and cash equivalents at beginning of period
|
105,338
|
151,151
|
151,151
|
87,106
|
68,301
|
|
Cash and cash equivalents at end of period
|
$131,516
|
$212,423
|
$105,338
|
$151,151
|
$87,106
|
|
In thousands
|
Payment Due by Period
|
||||
|
Contractual Obligations
|
Total
|
Less than
1 year |
1-3 years
|
3-5 years
|
More
than 5 years |
|
Operating Leases
|
$100,097
|
23,670
|
24,083
|
15,915
|
36,429
|
|
Six Months Ended June 30,
|
Year Ended December 31,
|
||||||
|
In thousands
|
2018
|
2017
|
2017
|
2016
|
2015(1)
|
2014(1)
|
2013(1)
|
|
Income Statement Data
|
|||||||
|
Total revenues
|
$1,773,888
|
$1,980,585
|
$3,930,308
|
$4,606,591
|
$5,421,479
|
$5,643,680
|
$5,880,292
|
|
Earnings before income taxes
|
212,310
|
157,083
|
432,399
|
707,517
|
836,899
|
1,118,063
|
1,153,056
|
|
Provision for income taxes
|
(44,084)
|
(56,984)
|
(44,303)
|
(167,428)
|
(349,275)
|
(375,685)
|
(372,923)
|
|
Net earnings
|
168,226
|
100,099
|
388,096
|
540,089
|
487,624
|
742,379
|
780,132
|
|
Less net earnings attributable to noncontrolling interests
|
4,136
|
6,811
|
14,311
|
6,144
|
7,547
|
3,810
|
4,577
|
|
Net earnings attributable to GE
|
$164,090
|
$93,288
|
$373,785
|
$533,945
|
$480,077
|
$738,569
|
$775,555
|
|
As of June 30,
|
Year Ended December 31,
|
|||||
|
In thousands
|
2018
|
2017
|
2016
|
2015(1)
|
2014(1)
|
2013(1)
|
|
Balance Sheet Data
|
||||||
|
Total assets
|
$3,839,271
|
$3,544,573
|
$3,626,918
|
$4,341,768
|
$4,503,357
|
$4,471,927
|
|
Long-term debt
|
67,509
|
44,257
|
92,772
|
185
|
8,495
|
24,153
|
| (1) | The data above as of December 31, 2015, 2014 and 2013 and for each of the years ended December 31, 2014 and 2013 has been derived from the historical consolidated financial statements of GE not included or incorporated by reference in this document. The data above as of and for each such period represents the historical results of GE’s transportation segment, and does not reflect (i) the adjustments and other assumptions that were utilized to present GE Transportation’s historical financial statements included elsewhere in this proxy statement on a ‘‘carve-out’’ basis from GE’s consolidated financial statements or (ii) the retrospective application of certain changes in accounting principles under U.S. GAAP. As such, GE Transportation’s results for such periods may not be directly comparable with GE Transportation’s historical financial statements included elsewhere in this proxy statement. |
|
Six Months Ended June 30,
|
Year Ended December 31,
|
||||||
|
In thousands, except per share data
|
2018
|
2017
|
2017
|
2016
|
2015
|
2014
|
2013
|
|
Income Statement Data
|
|||||||
|
Net Sales
|
$2,167,857
|
$1,848,287
|
$3,881,756
|
$2,931,188
|
$3,307,998
|
$3,044,454
|
$2,566,392
|
|
Gross profit
|
634,848
|
543,670
|
1,065,313
|
924,239
|
1,047,816
|
935,982
|
764,027
|
|
Operating expenses
|
(380,046)
|
(315,801)
|
(644,234)
|
(467,632)
|
(438,962)
|
(406,198)
|
(319,291)
|
|
Income from operations
|
254,802
|
227,869
|
421,079
|
456,607
|
608,854
|
529,784
|
444,736
|
|
Interest expense, net
|
(52,204)
|
(37,422)
|
(77,884)
|
(50,298)
|
(27,254)
|
(29,074)
|
(25,247)
|
|
Other (expenses) income, net
|
4,757
|
5,747
|
8,868
|
6,528
|
3,768
|
7,145
|
1,598
|
|
Net income attributable to Wabtec stockholders
|
$172,782
|
$145,914
|
$262,261
|
$304,887
|
$398,628
|
$351,680
|
$292,235
|
|
Diluted Earnings per Common Share
|
|||||||
|
Net income attributable to Wabtec stockholders
|
$1.79
|
$1.52
|
$2.72
|
$3.34
|
$4.10
|
$3.62
|
$3.01
|
|
Cash dividends declared per share
|
$0.24
|
$0.20
|
$0.44
|
$0.36
|
$0.28
|
$0.20
|
$0.13
|
|
Weighted average shares outstanding Diluted
|
96,471
|
96,071
|
96,125
|
91,141
|
97,006
|
96,885
|
96,832
|
|
As of June 30,
|
As of December 31,
|
|||||
|
In thousands
|
2018
|
2017
|
2016
|
2015
|
2014
|
2013
|
|
Balance Sheet Data
|
||||||
|
Total assets
|
$6,677,606
|
$6,579,980
|
$6,581,018
|
$3,229,513
|
$3,303,841
|
$2,821,997
|
|
Cash and cash equivalents
|
245,574
|
233,401
|
398,484
|
226,191
|
425,849
|
285,760
|
|
Total debt
|
1,884,921
|
1,870,528
|
1,892,776
|
692,238
|
521,195
|
450,709
|
|
Total equity
|
2,874,628
|
2,828,532
|
2,976,825
|
1,701,339
|
1,808,298
|
1,587,167
|
|
In millions, except per share data
(In U.S. dollars unless otherwise indicated) |
Wabtec
Historical |
GE Transportation
Historical |
Reclassification
Adjustments (Note 6) |
Pro Forma
Adjustments |
Notes
|
Pro Forma
Combined Wabtec/GE Transportation |
|
Sales of goods
|
$2,167.9
|
$1,101.8
|
$(91.3)
|
$(29.2)
|
$3,149.2
|
|
|
Sales of services
|
—
|
672.1
|
91.3
|
(58.0)
|
7(a)
|
705.4
|
|
Net sales
|
2,167.9
|
1,773.9
|
—
|
(87.2)
|
3,854.6
|
|
|
Cost of goods sold
|
(1,533.0)
|
(881.3)
|
153.1
|
19.6
|
7(d)
|
(2,241.6)
|
|
Cost of services sold
|
—
|
(406.0)
|
(73.9)
|
(3.1)
|
7(d)
|
(483.0)
|
|
Gross profit
|
634.8
|
486.6
|
79.2
|
(70.7)
|
1,129.9
|
|
|
Selling, general and administrative expenses
|
(318.4)
|
(264.8)
|
—
|
50.5
|
7(n)
|
(532.7)
|
|
Engineering expenses
|
(41.4)
|
—
|
(56.1)
|
—
|
(97.5)
|
|
|
Amortization expense
|
(20.3)
|
—
|
(23.1)
|
(86.1)
|
7(e)
|
(129.5)
|
|
Total operating expenses
|
(380.0)
|
(264.8)
|
(79.2)
|
(35.6)
|
(759.6)
|
|
|
Income from operations
|
254.8
|
221.8
|
—
|
(106.3)
|
370.3
|
|
|
Interest expense, net
|
(52.2)
|
—
|
(10.0)
|
(55.2)
|
7(k)
|
(117.4)
|
|
Non-operating benefit costs
|
—
|
(5.2)
|
5.2
|
—
|
—
|
|
|
Other (expense) income, net
|
4.8
|
(4.4)
|
4.8
|
—
|
5.2
|
|
|
Income from operations before income taxes
|
207.4
|
212.3
|
—
|
(161.5)
|
258.2
|
|
|
Income tax expense
|
(36.6)
|
(44.1)
|
—
|
36.2
|
7(j)
|
(44.5)
|
|
Net income
|
170.7
|
168.2
|
—
|
(125.3)
|
213.6
|
|
|
Less: Net income attributable to noncontrolling interest
|
2.1
|
(4.1)
|
—
|
—
|
(2.0)
|
|
|
Net income attributable to Wabtec stockholders
|
$172.8
|
$164.1
|
$—
|
$(125.3)
|
$211.6
|
|
|
Earnings Per Common Share
|
||||||
|
Basic
|
||||||
|
Net income attributable to Wabtec stockholders
|
$1.80
|
—
|
—
|
—
|
$1.09
|
|
|
Diluted
|
||||||
|
Net income attributable to Wabtec stockholders
|
$1.79
|
—
|
—
|
—
|
$1.08
|
|
|
Weighted average shares outstanding
|
||||||
|
Basic
|
95.867
|
—
|
—
|
98.480
|
7(m)
|
194.347
|
|
Diluted
|
96.471
|
—
|
—
|
98.480
|
194.951
|
|
In millions, except per share data
(In U.S. dollars unless otherwise indicated) |
Wabtec
Historical |
GE Transportation
Historical |
Reclassification
Adjustments (Note 6) |
Pro Forma
Adjustments |
Notes
|
Pro Forma
Combined Wabtec/GE Transportation |
|
Sales of goods
|
$3,881.8
|
$2,546.6
|
$(196.1)
|
$(73.8)
|
7(a)
|
$6,158.5
|
|
Sales of services
|
—
|
1,383.7
|
196.1
|
(78.9)
|
7(a)
|
1,500.9
|
|
Net sales
|
3,881.8
|
3,930.3
|
—
|
(152.7)
|
7,659.4
|
|
|
Cost of goods sold
|
(2,816.4)
|
(2,129.7)
|
319.0
|
52.5
|
7(a), 7(d)
|
(4,574.6)
|
|
Cost of services sold
|
—
|
(877.4)
|
(149.4)
|
(4.4)
|
7(a), 7(d)
|
(1,031.2)
|
|
Gross profit
|
1,065.3
|
923.2
|
169.6
|
(104.6)
|
2,053.5
|
|
|
Selling, general and administrative expenses
|
(512.6)
|
(449.7)
|
15.2
|
—
|
(947.1)
|
|
|
Engineering expenses
|
(95.2)
|
—
|
(113.1)
|
—
|
(208.3)
|
|
|
Amortization expense
|
(36.5)
|
—
|
(71.7)
|
(146.6)
|
7(e)
|
(254.8)
|
|
Total operating expenses
|
(644.2)
|
(449.7)
|
(169.6)
|
(146.6)
|
(1,410.1)
|
|
|
Income from operations
|
421.1
|
473.5
|
—
|
(251.2)
|
643.4
|
|
|
Interest expense, net
|
(77.9)
|
—
|
(41.2)
|
(133.7)
|
7(k)
|
(252.8)
|
|
Non-operating benefit costs
|
—
|
(16.9)
|
16.9
|
—
|
—
|
|
|
Other (expense) income, net
|
8.9
|
(24.3)
|
24.3
|
(1.0)
|
7(a)
|
7.9
|
|
Income from operations before income taxes
|
352.2
|
432.4
|
—
|
(385.9)
|
398.7
|
|
|
Income tax expense
|
(89.8)
|
(44.3)
|
—
|
113.8
|
7(j)
|
(20.3)
|
|
Net income
|
262.4
|
388.1
|
—
|
(272.1)
|
378.4
|
|
|
Less: Net income attributable to noncontrolling interest
|
—
|
(14.3)
|
—
|
—
|
(14.3)
|
|
|
Net income attributable to Wabtec stockholders
|
$262.4
|
$373.8
|
$—
|
$(272.1)
|
$364.1
|
|
|
Earnings Per Common Share
|
||||||
|
Basic
|
||||||
|
Net income attributable to Wabtec stockholders
|
$2.74
|
—
|
—
|
—
|
$1.87
|
|
|
Diluted
|
||||||
|
Net income attributable to Wabtec stockholders
|
$2.72
|
—
|
—
|
—
|
$1.87
|
|
|
Weighted average shares outstanding
|
||||||
|
Basic
|
95.453
|
—
|
—
|
98.480
|
7(m)
|
193.933
|
|
Diluted
|
96.125
|
—
|
—
|
98.480
|
194.605
|
|
In millions
(In U.S. dollars unless otherwise indicated) |
Wabtec
Historical |
GE Transportation
Historical |
Reclassification
Adjustment (Note 6) |
Pro Forma
Adjustments |
Notes
|
Pro Forma
Combined Wabtec/GE Transportation |
|
Assets
|
||||||
|
Current Assets
|
||||||
|
Cash and cash equivalents
|
$245.6
|
$131.5
|
$—
|
$(127.2)
|
7(b)
|
$249.9
|
|
Accounts receivable
|
835.2
|
207.5
|
—
|
(10.4)
|
1,032.3
|
|
|
Unbilled accounts receivables
|
378.1
|
—
|
581.1
|
(283.0)
|
7(a)
|
676.2
|
|
Contract and other deferred assets
|
—
|
581.1
|
(581.1)
|
—
|
—
|
|
|
Inventories
|
863.8
|
675.2
|
—
|
74.0
|
7(l)
|
1,613.0
|
|
Other current assets
|
124.3
|
230.4
|
—
|
—
|
354.7
|
|
|
Total current assets
|
2,446.9
|
1,825.7
|
—
|
(346.6)
|
3,926.0
|
|
|
Property, plant and equipment
|
1,009.2
|
1,960.7
|
—
|
(734.3)
|
7(d)
|
2,235.6
|
|
Accumulated depreciation
|
(453.4)
|
(1,029.0)
|
—
|
1,029.0
|
7(d)
|
(453.4)
|
|
Property, plant and equipment, net
|
555.8
|
931.7
|
—
|
294.7
|
7(d)
|
1,782.2
|
|
Other Assets
|
||||||
|
Goodwill
|
2,428.6
|
282.6
|
—
|
8,972.3
|
7(f)
|
11,683.5
|
|
Other intangibles, net
|
1,174.4
|
253.6
|
—
|
3,346.4
|
7(e)
|
4,774.4
|
|
Long-term contract and other deferred assets
|
—
|
400.9
|
(400.9)
|
—
|
—
|
|
|
Deferred income taxes
|
—
|
64.4
|
(64.4)
|
—
|
—
|
|
|
Other noncurrent assets
|
71.9
|
80.3
|
465.3
|
(369.3)
|
7(a), 7(h)
|
248.2
|
|
Total other assets
|
3,674.9
|
1,081.9
|
—
|
11,949.4
|
16,706.2
|
|
|
Total Assets
|
$6,677.6
|
$3,839.3
|
$—
|
$11,897.5
|
$22,414.4
|
|
|
Liabilities and Shareholders’ Equity
|
||||||
|
Current Liabilities
|
||||||
|
Accounts payable
|
$615.7
|
$706.7
|
$—
|
$(10.4)
|
$1,312.0
|
|
|
Customer deposits
|
390.1
|
—
|
619.4
|
—
|
1,009.5
|
|
|
Progress collections and other deferred income
|
—
|
619.4
|
(619.4)
|
—
|
—
|
|
|
Accrued compensation
|
163.6
|
—
|
122.9
|
—
|
286.5
|
|
|
Accrued warranty
|
137.1
|
—
|
23.1
|
—
|
160.2
|
|
|
Current portion of long-term debt
|
27.1
|
—
|
—
|
—
|
27.1
|
|
|
Other accrued liabilities
|
272.9
|
284.2
|
(146.0)
|
(29.8)
|
7(a), 7(i)
|
381.3
|
|
Total current liabilities
|
1,606.5
|
1,610.4
|
—
|
(40.2)
|
3,176.7
|
|
|
Long-term debt
|
1,857.8
|
67.5
|
—
|
2,810.7
|
7(c), 7(g)
|
4,736.0
|
|
Long-term progress collections and other deferred income
|
—
|
17.3
|
(17.3)
|
—
|
—
|
|
|
Reserve for postretirement and pension benefits
|
98.7
|
—
|
21.2
|
—
|
119.9
|
|
|
Deferred income taxes
|
155.6
|
224.7
|
—
|
(224.7)
|
7(h)
|
155.6
|
|
Accrued warranty
|
16.8
|
—
|
43.1
|
—
|
59.9
|
|
|
Other long term liabilities
|
67.6
|
88.8
|
(47.0)
|
345.6
|
7(a), 7(i)
|
455.0
|
|
Total Liabilities
|
3,803.0
|
2,008.7
|
—
|
2,891.4
|
8,703.1
|
|
|
Equity
|
||||||
|
Preferred Stock
|
—
|
—
|
—
|
—
|
—
|
|
|
Common Stock
|
1.3
|
—
|
—
|
1.0
|
7(m)
|
2.3
|
|
Additional paid-in capital
|
910.4
|
—
|
1,857.7
|
8,971.1
|
7(a), 7(m)
|
11,739.2
|
|
Net parent investment
|
—
|
1,857.7
|
(1,857.7)
|
—
|
—
|
|
|
Treasury stock
|
(821.2)
|
—
|
—
|
—
|
(821.2)
|
|
|
Retained earnings
|
2,923.0
|
—
|
—
|
(37.9)
|
2,885.1
|
|
|
Accumulated other comprehensive loss
|
(156.2)
|
(71.9)
|
—
|
71.9
|
7(m)
|
(156.2)
|
|
Total Group shareholders’ equity
|
2,857.3
|
1,785.9
|
—
|
9,006.1
|
13,649.3
|
|
|
Noncontrolling Interest
|
17.3
|
44.7
|
—
|
—
|
62.0
|
|
|
Total Equity
|
2,874.6
|
1,830.6
|
—
|
9,006.1
|
13,711.3
|
|
|
Total Liabilities and Equity
|
$6,677.6
|
$3,839.3
|
$—
|
$11,897.5
|
$22,414.4
|
| 1. | Description of the transaction |
|
Purchase Price
|
Estimated Goodwill
|
|
|
As presented in the Pro Forma Combined results
|
$14,164.6
|
$9,254.9
|
|
10% Increase in Wabtec Common Stock Price
|
$15,247.6
|
$10,337.9
|
|
10% Decrease in Wabtec Common Stock Price
|
$13,081.6
|
$8,171.9
|
| 2. | Basis of presentation |
| 3. | Preliminary purchase price allocation |
|
Cash and cash equivalents
|
$0.0
|
|
Accounts receivable
|
495.2
|
|
Inventories
|
749.2
|
|
Other current assets
|
230.4
|
|
Property, plant and equipment
|
1,226.4
|
|
Goodwill
|
9,254.9
|
|
Trade names
|
300.0
|
|
Intellectual property
|
600.0
|
|
Backlog
|
2,000.0
|
|
Customer relationships
|
700.0
|
|
Other noncurrent assets
|
176.2
|
|
Total assets acquired
|
15,732.3
|
|
Current liabilities
|
(1,488.0)
|
|
Contingent consideration
|
(434.7)
|
|
Other noncurrent liabilities
|
(99.1)
|
|
Total liabilities assumed
|
(2,021.8)
|
|
Net assets acquired
|
$ 13,710.5
|
|
Noncontrolling interest acquired
|
$ (44.7)
|
| 4. | Financing transactions |
| 5. | Tax benefits |
| 6. | Reclassification adjustments |
| 7. | Pro forma adjustments |
| a. | Reflects adjustments to GE Transportation’s historical financial statements to conform to Wabtec’s adoption of ASC 606 using the modified retrospective method. GE Transportation adopted Accounting Standards Update (‘‘ASU’’) No. 2014-09 ‘‘Revenue from Contracts with Customers’’ using the full retrospective method. Additionally, reflects adjustments to GE Transportation’s historical financial statements to conform to Wabtec’s revenue recognition policy for long term service contracts. Other adjustments may be required to conform to Wabtec’s accounting policies, but they are not expected to be material. In addition, non-cash amortization expense from purchase price accounting will impact the results of operations. |
| b. | Represents the change in cash and cash equivalents resulting from the following adjustments directly related to the Transactions (in millions): |
|
As of
June 30, 2018 |
|
|
Additional new debt
|
$2,900.0
|
|
Deferred issuance costs on new debt
|
(21.8)
|
|
Direct Sale Purchase Price payment
|
(2,900.0)
|
|
Settlement of GE Transportation loans payable
|
(67.5)
|
|
Additional Transaction costs to be paid at closing
|
(37.9)
|
|
Pro forma decrease in cash and cash equivalents
|
$(127.2)
|
| c. | Represents additional borrowings of $2.9 billion, net of deferred issuance costs of $21.8 million, to finance the Direct Sale Purchase Price. |
| d. | Reflects the adjustment of $294.7 million to increase the basis in the acquired property, plant and equipment to estimated fair value and eliminates GE Transportation’s historical Accumulated depreciation of $1,029.0 million against property, plant and equipment. The estimated useful lives range from three to forty years. The fair value and useful life calculations are preliminary and subject to change after Wabtec finalizes its review of the specific types, nature, age, condition and location of GE Transportation’s property, plant and equipment. The following table summarizes the changes in the estimated depreciation expense (in millions): |
|
Year Ended
December 31, 2017 |
Six Months Ended
June 30, 2018 |
|
|
Estimated depreciation expense
|
$132.1
|
$64.9
|
|
Historical depreciation expense
|
(112.3)
|
(55.1)
|
|
Pro forma increase in depreciation expense
|
$19.8
|
$9.8
|
| e. | Reflects the adjustment of historical intangible assets acquired by Wabtec to their estimated fair values. As part of the preliminary valuation analysis, Wabtec identified intangible assets, including trade names, intellectual property, backlog and customer relationships. The fair value of identifiable intangible assets is determined primarily using the ‘‘income approach,’’ which requires a forecast of expected future cash flows related to these intangibles. The following table summarizes the estimated fair values of GE Transportation’s identifiable intangible assets, their estimated useful lives and their amortization on a linear basis (in millions): |
|
Amortization
|
||||
|
Estimated
Fair Value |
Estimated
Useful Life in Years |
Year Ended
December 31, 2017 |
Six Months Ended
June 30, 2018 |
|
|
Trade names
|
$300.0
|
9
|
$33.3
|
$16.7
|
|
Intellectual property
|
600.0
|
12
|
50.0
|
25.0
|
|
Backlog
|
2,000.0
|
20
|
100.0
|
50.0
|
|
Customer relationships
|
700.0
|
20
|
35.0
|
17.5
|
|
$3,600.0
|
$218.3
|
$109.2
|
||
|
Historical amortization expense
|
(71.7)
|
(23.1)
|
||
|
Pro forma increase in amortization expense
|
$146.6
|
$86.1
|
||
| f. | Reflects adjustment to remove GE Transportation’s historical goodwill of $282.6 million and record goodwill associated with the Transactions of $9,254.9 million as shown in Note 3. |
| g. | Reflects the adjustment for the settlement of GE Transportation’s loans payable to GE affiliates outside of GE Transportation in the amount of $67.5 million which will be settled prior to the consummation of the Transactions. |
| h. | Reflects adjustment to eliminate GE Transportation’s historical deferred tax assets and deferred tax liabilities in the amount of $64.4 million and $224.7 million, respectively. |
| i. | Represents the estimated fair value of contingent consideration of $434.7 million related to payment of a fixed amount, $470.0 million, to GE which is directly related to the timing of tax benefits expected to be realized subsequent to the Transactions. $82.1 million of the total contingent consideration is classified in Other accrued liabilities and $352.6 million is classified in Other long term liabilities. |
| j. | Reflects the income tax effect of pro forma adjustments based on an estimated combined tax rate of 29.5% and 22.4% for the year ended December 31, 2017 and the six months ended June 30, 2018, respectively. |
| k. | Represents the net increase to interest expense resulting from interest on incurrence of an assumed $2.9 billion of new debt to finance the Direct Share Purchase Price and other interest adjustments directly related to the Transactions, as follows (in millions): |
|
Year Ended
December 31, 2017 |
Six Months Ended
June 30, 2018 |
|
|
Interest expense on new debt
|
$125.5
|
$62.8
|
|
Elimination of interest expense on Bridge Commitments
|
0.0
|
(11.6)
|
|
Elimination of interest on retired GET debt
|
(4.8)
|
(2.5)
|
|
Accretion of contingent consideration
|
8.8
|
4.4
|
|
Amortization of new debt issuance costs
|
4.2
|
2.1
|
|
Pro forma adjustments to interest expense
|
$133.7
|
$55.2
|
| l. | Represents the estimated adjustment to step up GE Transportation’s inventory to a fair value of approximately $749.2 million, an increase of $74.0 million from the carrying value. The fair value calculation is preliminary and subject to change. The fair value was determined based on the estimated selling price of the inventory less the remaining manufacturing and selling costs and a normal profit margin on those manufacturing and selling efforts. After the consummation of the Transactions, the step-up in inventory fair value of $74.0 million will increase cost of sales over approximately 12 months as the inventory is sold. This increase is not reflected in the unaudited pro forma condensed combined statements of income because it does not have a continuing impact. |
| m. | Represents the elimination of the historical equity of GE Transportation and the issuance of 98.5 million shares of Wabtec common stock as consideration in the Merger resulting in an adjustment to Common stock and Additional paid-in capital of $1.0 million and $10,828.9 million, respectively. |
| n. | Represents the elimination of transaction costs of $50.5 million directly related to the Transactions which will not have a recurring impact on operations. |
| (a) | 500,000,000 shares of Common Stock, each having a par value of one penny ($.01); and |
| (b) | 1,000,000 shares of Preferred Stock, each having a par value of one penny ($.01).’’ |
|
Name and Address of Beneficial Owner
|
Beneficial Ownership(1)
|
Percentage of Class
|
|
General Electric Company
41 Farnsworth Street Boston, Massachusetts 02210 |
10,644,415.45(2)
|
11.03%
|
|
BlackRock, Inc.
55 East 52nd Street New York, New York 10055 |
7,799,634(3)
|
8.08%
|
|
The Vanguard Group
100 Vanguard Blvd. Malvern, Pennsylvania 19355 |
7,382,288(4)
|
7.65%
|
|
Faiveley Family Interests
3, rue du 19 mars 196Z 92230 Gennevilliers, France |
6,309,670(5)
|
6.54%
|
|
Farallon Capital Partners, L.P.
c/o Farallon Capital Management, L.L.C. One Maritime Plaza, Suite 2100 San Francisco, California 94111 |
5,409,481(6)
|
5.61%
|
|
EdgePoint Investment Group Inc.
150 Bloor Street West, Suite 500 Toronto, Ontario M5S 2X9, Canada |
5,143,571(7)
|
5.33%
|
| (1) | Under SEC regulations, a person who has or shares voting or investment power with respect to a security is considered a beneficial owner of the security. Voting power is the power to vote or direct the voting of shares, and investment power is the power to dispose of or direct the disposition of shares. Unless otherwise indicated in the other footnotes below, each person has sole voting power and sole investment power as to all shares listed opposite such person’s name. |
| (2) | Based solely upon the information in the Schedule 13D filed May 30, 2018, General Electric Company may be deemed to have shared voting power and shared dispositive power with respect to 10,644,415.45 shares as a result of the Voting Agreement, which represents the aggregate number of shares beneficially owned by the parties to the Voting Agreement, as described under ‘‘Other Agreements—Voting Agreement.’’ |
| (3) | Based solely upon the information in the Schedule 13G/A filed January 23, 2018, BlackRock, Inc. has sole dispositive power with respect to 7,799,634 shares and sole voting power with respect to 7,171,303 shares. |
| (4) | Based solely upon the information in the Schedule 13G/A filed February 9, 2018, The Vanguard Group has sole dispositive power with respect to 7,299,017 shares, sole voting power with respect to 67,195 shares, shared dispositive power with respect to 83,271 shares and shared voting power with respect to 20,102 shares. |
| (5) | Based solely upon the information in the Schedule 13D/A filed May 24, 2018, the Faiveley family members and entities described therein (collectively, the ‘‘Faiveley Family Interests’’) have voting and dispositive power with respect to Wabtec common stock as follows: (i) Mr. Erwan Faiveley may be deemed to have sole power to direct the voting and disposition of 3,898 shares, and the shared power to direct the voting and disposition of 6,305,582 shares; (ii) Mr. Francois Faiveley may be deemed to have sole power to direct the voting and disposition of 190 shares, and the shared power to direct the voting and disposition of 6,305,582 shares; (iii) Financiére Faiveley S.A. may be deemed to have the shared power to direct the voting and disposition of 6,305,582 shares; (iv) Famille Faiveley Participations S.A.S. may be deemed to have the shared power to direct the voting and disposition of 6,305,582 shares; and (v) Faivinvest S.C.A. may be deemed to have shared power to direct the voting and disposition of 6,305,582 shares. |
| (6) | Based solely upon the information in the Schedule 13G/A filed February 14, 2018. Farallon Capital Partners, L.P. and its affiliates have, in the aggregate, shared dispositive power and shared voting power with respect to 5,409,481 shares. |
| (7) | Based solely upon the information in the Schedule 13G filed February 13, 2018. EdgePoint Investment Group Inc. has shared dispositive power and shared voting power with respect to 5,143,571 shares. |
|
Shares Owned
|
Percentage of Class
|
|
|
Named Executive Officer
|
||
|
Raymond T. Betler
|
301,029(1)(2)(3)
|
*
|
|
Patrick D. Dugan
|
68,815(1)(2)
|
*
|
|
Stéphane Rambaud-Measson
|
46,367(1)(2)
|
*
|
|
David L. DeNinno
|
65,888(1)(2)
|
*
|
|
Scott E. Wahlstrom
|
143,615(1)(2)
|
*
|
|
Albert J. Neupaver
|
722,155(1)(2)
|
*
|
|
Director
|
||
|
Philippe Alfroid
|
3,380(1)
|
*
|
|
Robert J. Brooks
|
476,645(1)(2)(4)(5)
|
*
|
|
Erwan Faiveley
|
6,310,679(1)(6)
|
6.54%
|
|
Emilio A. Fernandez
|
1,377,896(1)(2)(5)(7)
|
1.43%
|
|
Lee B. Foster, II
|
74,106(1)(2)(8)
|
*
|
|
Linda S. Harty
|
6,254(1)
|
*
|
|
Brian P. Hehir
|
26,573(1)(9)
|
*
|
|
Michael W.D. Howell
|
5,650(1)
|
*
|
|
William E. Kassling
|
1,103,378(1)(2)(5)(10)
|
1.15%
|
|
Directors and Executive Officers as a Group (15 persons)
|
10,772,188(1)(2)
|
11.16%
|
| * | Less than 1% |
| (1) | Includes shares of Wabtec Restricted Stock as follows: Mr. Betler 42,550; Mr. Dugan 27,750; Mr. Rambaud-Measson 39,400; Mr. DeNinno 29,800; Mr. Wahlstrom 12,640; Mr. Neupaver 39,075; each non-employee director 1,620; and all directors and executive officers as a group 215,776. The restricted stockholders have sole voting power with respect to the shares of Wabtec Restricted Stock but do not have sole or shared dispositive power until the shares of Wabtec Restricted Stock vest. |
| (2) | Includes Wabtec Options that are exercisable on or within 60 days of August 1, 2018 as follows: Mr. Betler 115,865; Mr. Dugan 0; Mr. Rambaud-Measson 0; Mr. DeNinno 0; Mr. Wahlstrom 21,205; Mr. Neupaver 123,680; Mr. Brooks 8,000; Mr. Fernandez 8,000; Mr. Foster 4,000; Mr. Kassling 8,000; and all directors and executive officers as a group 296,220. |
| (3) | Includes 131,670 shares owned by Mr. Betler. Also includes 53,494 shares owned by a grantor annuity trust established by Mr. Betler. |
| (4) | Includes 82,872 shares owned by Mr. Brooks. Also includes 385,773 shares owned by Suebro, Inc., a Delaware holding company. |
| (5) | Includes certain shares pledged to financial institutions as collateral for credit arrangements at December 31, 2017 as follows. Mr. Kassling had a margin balance of approximately $150,000, a reduction of approximately $6.5 million from the prior year. Mr. Kassling has pledged 475,000 shares of Wabtec stock. Mr. Brooks had a margin balance of approximately $11.6 million, a reduction of approximately $1 million from the prior year. Mr. Brooks has pledged 374,804 shares of Wabtec stock. Additionally, there are also non-Wabtec shares pledged against the margin balance in the amount of $8.3 million. Mr. Fernandez had a margin balance of approximately $3.3 million. Mr. Fernandez has pledged 324,479 shares of Wabtec stock, which was a decrease of 500,000 shares of Wabtec stock pledged against the margin balance from the prior year. On February 29, 2016, the Wabtec Board adopted a policy prohibiting future pledges of Company stock as collateral for credit arrangements and requiring any such existing pledges to be eliminated by December 30, 2016 unless it is reasonably impracticable to do so and an extension is granted by the Board. During 2017, the Board approved an extension for Messrs. Kassling, Brooks and Fernandez based upon substantial ongoing progress made in unwinding the pledge agreements and will again review these outstanding pledges during 2018. |
| (6) | Includes 6,306,781 shares held by the Faiveley Family Interests as described in Footnote (5) to the table above. |
| (7) | Includes 855,546 shares owned by Mr. Fernandez. Also includes 514,350 shares owned by Mr. Fernandez’s wife. Mr. Fernandez disclaims beneficial ownership of the shares held by his wife. |
| (8) | Includes 15,200 shares owned by Mr. Foster, 17,500 shares held by Lee B. Foster II Dynasty Trust and 37,406 shares held by the Lee B. Foster II Revocable Trust. |
| (9) | Includes 23,576 shares owned by Mr. Hehir. Also includes 3,000 shares held by the Brian P. Hehir and Janet S. Hehir Foundation for which Mr. Hehir serves as a trustee. |
| (10) | Includes 73,444 shares owned by Mr. Kassling. Also includes 1,018,654 shares owned by Davideco, a Delaware corporation, and 3,280 shares owned by Mr. Kassling’s wife. Mr. Kassling disclaims beneficial ownership of the shares held by his wife. |
| • | Wabtec’s annual report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 26, 2018; |
| • | Wabtec’s quarterly reports on Form 10-Q for the three-month period ended March 31, 2018 filed with the SEC on May 4, 2018 and for the six-month period ended June 30, 2018 filed with the SEC on July 31, 2018; |
| • | Wabtec’s Current Reports on Form 8-K filed with the SEC on May 17, 2018, May 21, 2018, May 24, 2018, June 14, 2018, September 10, 2018 and September 14, 2018; |
| • | Wabtec’s Definitive Proxy Statement filed with the SEC on April 5, 2018; and |
| • | The description of Wabtec common stock, par value $0.01 per share, contained in Wabtec’s Form 8-A filed with the SEC on May 19, 1995. |
|
Page
|
|
|
Audited Financial Statements of GE Transportation:
|
|
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
Combined Statement of Earnings for the Years Ended December 31, 2017, 2016 and 2015
|
F-3
|
|
Combined Statement of Comprehensive Income for the Years Ended December 31, 2017, 2016 and 2015
|
F-4
|
|
Combined Statement of Changes in Equity for the Years Ended December 31, 2017, 2016 and 2015
|
F-5
|
|
Combined of Financial Position December 31, 2017, 2016 and 2015
|
F-6
|
|
Combined Statement of Cash Flows for the Years Ended December 31, 2017, 2016 and 2015
|
F-7
|
|
Notes to Combined Financial Statements
|
F-8
|
|
Unaudited Financial Statements of GE Transportation:
|
|
|
Independent Auditors’ Review Report
|
F-38
|
|
Condensed Combined Statement of Earnings (Unaudited) for the Three Months Ended June 30, 2018 and 2017
|
F-39
|
|
Condensed Combined Statement of Earnings (Unaudited) for the Six Months Ended June 30, 2018 and 2017
|
F-40
|
|
Condensed Combined Statement of Comprehensive Income (Unaudited) for the Three Months Ended June 30, 2018 and 2017
|
F-41
|
|
Condensed Combined Statement of Comprehensive Income (Unaudited) for the Six Months Ended June 30, 2018 and 2017
|
F-42
|
|
Condensed Combined Statement of Changes in Equity (Unaudited) for the Six Months Ended June 30, 2018 and 2017
|
F-43
|
|
Condensed Combined Statement of Financial Position (Unaudited) as of June 30, 2018 and December 31, 2017
|
F-44
|
|
Condensed Combined Statement of Cash Flows (Unaudited) for the Six Months Ended June 30, 2018 and 2017
|
F-45
|
|
Notes to Condensed Combined Financial Statements
|
F-46
|
|
For the years ended December 31 (In thousands)
|
2017
|
2016
|
2015
|
|
Revenues
|
|||
|
Sales of goods
|
$2,546,637
|
$3,046,546
|
$3,998,100
|
|
Sales of services
|
1,383,671
|
1,560,045
|
1,423,379
|
|
Total revenues (Note 3)
|
3,930,308
|
4,606,591
|
5,421,479
|
|
Costs of revenues
|
|||
|
Cost of goods sold
|
2,129,684
|
2,525,838
|
3,163,798
|
|
Cost of services sold
|
877,390
|
909,116
|
931,745
|
|
Gross profit
|
923,234
|
1,171,637
|
1,325,936
|
|
Selling, general and administrative expenses
|
449,651
|
432,229
|
414,488
|
|
Impairment of goodwill
|
—
|
2,027
|
85,421
|
|
Non-operating benefit costs
|
16,877
|
18,455
|
16,249
|
|
Other (expense) income
|
(24,307)
|
(11,409)
|
27,121
|
|
Earnings before income taxes
|
432,399
|
707,517
|
836,899
|
|
Provision for income taxes (Note 13)
|
(44,303)
|
(167,428)
|
(349,275)
|
|
Net earnings
|
388,096
|
540,089
|
487,624
|
|
Less net earnings attributable to noncontrolling interests
|
14,311
|
6,144
|
7,547
|
|
Net earnings attributable to Parent
|
$373,785
|
$533,945
|
$480,077
|
|
For the years ended December 31 (In thousands)
|
2017
|
2016
|
2015
|
|
Net earnings
|
$388,096
|
$540,089
|
$487,624
|
|
Less net earnings attributable to noncontrolling interests
|
14,311
|
6,144
|
7,547
|
|
Net earnings attributable to Parent
|
373,785
|
533,945
|
480,077
|
|
Other comprehensive income (loss)
|
|||
|
Foreign currency translation adjustments
|
15,568
|
22,970
|
(42,755)
|
|
Benefit plans, net of taxes
|
459
|
(1,092)
|
120
|
|
Other comprehensive income (loss), net of taxes
|
16,027
|
21,878
|
(42,635)
|
|
Less other comprehensive income (loss) attributable to noncontrolling interests
|
703
|
(6,101)
|
3,194
|
|
Other comprehensive income (loss) attributable to Parent
|
15,324
|
27,979
|
(45,829)
|
|
Comprehensive income (loss)
|
404,123
|
561,967
|
444,989
|
|
Less comprehensive income (loss) attributable to noncontrolling interests
|
15,014
|
43
|
10,741
|
|
Comprehensive income attributable to Parent
|
$389,109
|
$561,924
|
$434,248
|
|
(In thousands)
|
Net Parent
Investment |
Accumulated
Other Comprehensive Income / (Loss) |
Equity
Attributable to Noncontrolling Interests |
Total
Equity |
|
Balances as of January 1, 2015
|
$1,659,426
|
$(53,066)
|
$11,831
|
$1,618,191
|
|
Net earnings
|
480,077
|
—
|
7,547
|
487,624
|
|
Foreign currency translation adjustments
|
—
|
(45,959)
|
3,204
|
(42,755)
|
|
Benefit plans, net of taxes
|
—
|
130
|
(10)
|
120
|
|
Transfers (to) Parent
|
(635,458)
|
—
|
—
|
(635,458)
|
|
Changes in equity attributable to noncontrolling interests
|
—
|
—
|
(662)
|
(662)
|
|
Total equity balance as of December 31, 2015
|
1,504,045
|
(98,895)
|
21,910
|
1,427,060
|
|
Net earnings
|
533,945
|
—
|
6,144
|
540,089
|
|
Foreign currency translation adjustments
|
—
|
28,992
|
(6,022)
|
22,970
|
|
Benefit plans, net of taxes
|
—
|
(1,013)
|
(79)
|
(1,092)
|
|
Transfers (to) Parent
|
(612,311)
|
—
|
—
|
(612,311)
|
|
Changes in equity attributable to noncontrolling interests
|
—
|
—
|
6,248
|
6,248
|
|
Total equity balance as of December 31, 2016
|
1,425,679
|
(70,916)
|
28,201
|
1,382,964
|
|
Net earnings
|
373,785
|
—
|
14,311
|
388,096
|
|
Foreign currency translation adjustments
|
—
|
14,849
|
719
|
15,568
|
|
Benefit plans, net of taxes
|
—
|
475
|
(16)
|
459
|
|
Transfers (to) Parent
|
(112,313)
|
—
|
—
|
(112,313)
|
|
Changes in equity attributable to noncontrolling interests
|
—
|
—
|
(1,551)
|
(1,551)
|
|
Total equity balance as of December 31, 2017
|
$1,687,151
|
$(55,592)
|
$41,664
|
$1,673,223
|
|
As of December 31 (In thousands)
|
2017
|
2016
|
|
Assets
|
||
|
Cash and equivalents
|
$105,338
|
$151,151
|
|
Current receivables, net (Note 5)
|
172,386
|
162,536
|
|
Inventories (Note 6)
|
560,443
|
740,958
|
|
Contract and other deferred assets (Note 3)
|
535,442
|
465,532
|
|
Prepaid expenses and other current assets (Note 9)
|
226,280
|
185,415
|
|
Total current assets
|
1,599,889
|
1,705,592
|
|
Property, plant and equipment, net (Note 7)
|
943,168
|
934,515
|
|
Goodwill and intangible assets (Note 8)
|
537,526
|
547,420
|
|
Long-term contract and other deferred assets (Note 3)
|
321,392
|
357,231
|
|
Deferred income taxes (Note 13)
|
64,839
|
61,165
|
|
Other assets (Note 10)
|
77,759
|
20,995
|
|
Total assets
|
$3,544,573
|
$3,626,918
|
|
Liabilities and equity
|
||
|
Short-term borrowings (Note 11)
|
$45
|
$21,740
|
|
Accounts payable
|
604,328
|
682,540
|
|
Progress collections and deferred income (Note 3)
|
592,427
|
689,946
|
|
Other current liabilities (Note 14)
|
282,723
|
241,301
|
|
Total current liabilities
|
1,479,523
|
1,635,527
|
|
Long-term borrowings (Note 11)
|
44,257
|
92,772
|
|
Long-term progress collections and other deferred income (Note 3)
|
23,797
|
9,798
|
|
Deferred income taxes (Note 13)
|
231,582
|
363,368
|
|
Other liabilities (Note 14)
|
92,191
|
142,489
|
|
Total liabilities
|
1,871,350
|
2,243,954
|
|
Net parent investment
|
1,687,151
|
1,425,679
|
|
Accumulated other comprehensive loss
|
(55,592)
|
(70,916)
|
|
Total equity attributable to Parent
|
1,631,559
|
1,354,763
|
|
Equity attributable to noncontrolling interests
|
41,664
|
28,201
|
|
Total equity
|
1,673,223
|
1,382,964
|
|
Total liabilities and equity
|
$3,544,573
|
$3,626,918
|
|
For the years ended December 31 (In thousands)
|
2017
|
2016
|
2015
|
|
Cash flows - operating activities
|
|||
|
Net earnings
|
$388,096
|
$540,089
|
$487,624
|
|
Less net earnings attributable to noncontrolling interests
|
14,311
|
6,144
|
7,547
|
|
Net earnings attributable to the Parent
|
373,785
|
533,945
|
480,077
|
|
Adjustments to reconcile net earnings attributable to the Parent to cash provided by operating activities:
|
|||
|
Depreciation and amortization expenses
|
184,012
|
219,628
|
208,899
|
|
Unrealized (gains) losses from derivative instruments
|
2,535
|
(362)
|
(28,582)
|
|
Impairment of goodwill
|
—
|
2,027
|
85,421
|
|
Share-based compensation expense
|
7,375
|
10,587
|
13,825
|
|
Deferred income taxes
|
(135,461)
|
14,691
|
20,384
|
|
Losses (gains) from sale of property, plant and equipment
|
100
|
(14,157)
|
(5,565)
|
|
Changes in operating assets and liabilities:
|
|||
|
(Increase) decrease in current receivables
|
(10,148)
|
14,407
|
158,353
|
|
Decrease (increase) in inventories
|
189,659
|
155,356
|
(63,313)
|
|
(Increase) decrease in contract and other deferred assets
|
(56,228)
|
(85,394)
|
26,514
|
|
(Decrease) in prepaid expenses and other assets
|
(46,401)
|
(107,254)
|
(15,361)
|
|
(Decrease) increase in accounts payable
|
(82,736)
|
(70,253)
|
39,640
|
|
(Decrease) increase in progress collections and other deferred income
|
(83,519)
|
147,997
|
(25,549)
|
|
(Increase) decrease in other liabilities
|
(19,510)
|
35,345
|
(16,410)
|
|
All other operating activities
|
(1,459)
|
(2,851)
|
(3,099)
|
|
Cash provided by operating activities
|
322,004
|
853,712
|
875,234
|
|
Cash flows - investing activities
|
|||
|
Additions to property, plant and equipment
|
(116,811)
|
(116,389)
|
(188,970)
|
|
Dispositions of property, plant and equipment
|
25,550
|
63,430
|
15,587
|
|
Additions to internal-use software
|
(61,581)
|
(66,372)
|
(52,089)
|
|
Payments for principal businesses purchased
|
—
|
(63,439)
|
—
|
|
Investment in associated companies
|
(50,116)
|
(444)
|
—
|
|
All other investing activities
|
2,002
|
15,000
|
(403)
|
|
Cash (used for) investing activities
|
(200,956)
|
(168,214)
|
(225,875)
|
|
Cash flows - financing activities
|
|||
|
Newly issued debt (maturities longer than 90 days)
|
44,256
|
—
|
33,945
|
|
Repayments and other reductions (maturities longer than 90 days)
|
(114,466)
|
(13,961)
|
(16,651)
|
|
Transfers (to) Parent
|
(112,313)
|
(612,311)
|
(635,458)
|
|
All other financing activities
|
11,461
|
686
|
(4,606)
|
|
Cash (used for) financing activities
|
(171,062)
|
(625,586)
|
(622,770)
|
|
Effect of currency exchange rate changes on cash and equivalents
|
4,201
|
4,133
|
(7,784)
|
|
(Decrease) increase in cash and equivalents
|
(45,813)
|
64,045
|
18,805
|
|
Cash and equivalents at beginning of year
|
151,151
|
87,106
|
68,301
|
|
Cash and equivalents at end of year
|
$105,338
|
$151,151
|
$87,106
|
|
Supplemental disclosure of cash flow information
|
|||
|
Cash paid during the year for interest on borrowings
|
$(4,484)
|
$(7,611)
|
$(6,321)
|
|
Cash paid during the year for income taxes
|
$(200,482)
|
$(313,672)
|
$(296,776)
|
| NOTE 1 | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION |
| NOTE 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| (A) | ESTIMATES AND ASSUMPTIONS |
| (B) | FOREIGN CURRENCY |
| (C) | EQUITY-ACCOUNTED INVESTMENTS |
| (D) | ACQUISITIONS |
| (E) | CASH AND EQUIVALENTS |
| (F) | CURRENT RECEIVABLES, NET |
| (G) | CONCENTRATION OF CREDIT RISK |
| (H) | CURRENT RECEIVABLES FACTORING PROGRAM |
| (I) | INVENTORIES |
| (J) | RESTRUCTURING COSTS |
| (K) | SEGMENT REPORTING |
| (L) | PROPERTY, PLANT AND EQUIPMENT |
| (M) | GOODWILL |
| (N) | INTANGIBLE ASSETS, NET |
| (O) | TRADE PAYABLES ACCELERATED PAYMENT PROGRAM |
| (P) | RESEARCH AND DEVELOPMENT COSTS (‘‘R&D’’) |
| (Q) | PENSION AND POSTRETIREMENT BENEFITS |
| (R) | FAIR VALUE MEASUREMENTS |
| Level 1 - | Quoted prices for identical instruments in active markets. |
| Level 2 - | Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. |
| Level 3 - | Significant inputs to the valuation model are unobservable. |
| (S) | RECURRING FAIR VALUE MEASUREMENTS |
| (T) | NON-RECURRING FAIR VALUE MEASUREMENTS |
| (U) | INCOME TAXES |
| (V) | COMMITMENTS AND CONTINGENCIES |
| (W) | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
| (X) | RECENT ACCOUNTING PRONOUNCEMENTS REFLECTED IN THESE COMBINED FINANCIAL STATEMENTS |
| (Y) | OTHER RECENT ACCOUNTING PRONOUNCEMENTS |
| NOTE 3 | REVENUE RELATED TO CONTRACTS WITH CUSTOMERS |
|
(In thousands)
|
Equipment
|
Services
|
Digital
|
Total
|
|
|
U.S.
|
2017
|
$775,008
|
$1,205,801
|
$200,556
|
$2,181,365
|
|
2016
|
1,317,493
|
1,296,111
|
224,155
|
2,837,759
|
|
|
2015
|
2,218,226
|
1,366,143
|
153,640
|
3,738,009
|
|
|
Europe
|
2017
|
60,341
|
6,028
|
3,087
|
69,456
|
|
2016
|
22,462
|
7,154
|
826
|
30,442
|
|
|
2015
|
45,517
|
6,425
|
31,011
|
82,953
|
|
|
Asia
|
2017
|
190,484
|
199,383
|
4,093
|
393,960
|
|
2016
|
174,085
|
180,959
|
3,996
|
359,040
|
|
|
2015
|
127,272
|
211,206
|
12,124
|
350,602
|
|
|
Other
|
2017
|
742,135
|
475,743
|
67,649
|
1,285,527
|
|
2016
|
930,200
|
407,316
|
41,834
|
1,379,350
|
|
|
2015
|
789,927
|
415,966
|
44,022
|
1,249,915
|
|
|
Total revenue
|
2017
|
$1,767,968
|
$1,886,955
|
$275,385
|
$3,930,308
|
|
2016
|
2,444,240
|
1,891,540
|
270,811
|
4,606,591
|
|
|
2015
|
3,180,942
|
1,999,740
|
240,797
|
5,421,479
|
|
At December 31,
|
||
|
(in thousands)
|
2017
|
2016
|
|
Contractual service agreements(a)
|
$416,199
|
$368,321
|
|
Equipment contract revenue(b)
|
79,588
|
73,102
|
|
Deferred inventory costs(c)
|
39,655
|
24,199
|
|
Total contract and other deferred assets
|
$535,442
|
$465,532
|
|
Long-term contractual service agreements(a)
|
$193,389
|
$227,610
|
|
Long-term equipment contract revenue(b)
|
33,484
|
14,549
|
|
Long-term non-recurring engineering costs(d)
|
86,868
|
84,539
|
|
Other
|
7,651
|
30,533
|
|
Total long-term contract and other deferred assets
|
$321,392
|
$357,231
|
|
Progress collections(e)
|
$564,971
|
$660,036
|
|
Deferred income
|
27,456
|
29,910
|
|
Total progress collections and deferred income
|
$592,427
|
$689,946
|
|
Long-term progress collections(e)
|
$20,740
|
$6,743
|
|
Long-term deferred income
|
3,057
|
3,055
|
|
Total long-term progress collections and other deferred income
|
$23,797
|
$9,798
|
|
Total contract and other deferred assets, net
|
$240,610
|
$123,019
|
| (a) | Reflects revenues earned in excess of billings on our CSAs in our Services segment. |
| (b) | Reflects revenues earned in excess of billings primarily on our long-term contracts to construct equipment principally in our Equipment and Digital segments. |
| (c) | Represents cost deferral for shipped goods and other costs for which the criteria for revenue recognition has not yet been met. |
| (d) | Includes fulfillment costs incurred prior to production (e.g., engineering costs specific to an individual customer’s contract) for long-term equipment production contracts, primarily within our Equipment segment, which are allocated proportionately over the life of the contract. |
| (e) | Includes billings in excess of revenue on our long-term equipment and CSAs. |
| • | Equipment - total remaining performance obligations of $4,688,665 thousand of which 71% is expected to be satisfied within 5 year(s) and the remaining thereafter. |
| • | Services - total remaining performance obligations of $10,263,026 thousand of which 52% is expected to be satisfied within 5 year(s), 80% within 10 year(s) and the remaining thereafter. |
| • | Digital - total remaining performance obligations of $567,662 thousand of which 79% is expected to be satisfied within 5 year(s) and the remaining thereafter. |
| NOTE 4 | RELATED PARTY TRANSACTIONS |
| • | Amounts for due to / due from affiliates are recorded in Accounts payable and Current receivables, and are settled in cash. The Business has accounts payable resulting from amounts due to affiliates of $48,057 thousand and $70,008 thousand as of December 31, 2017 and 2016, respectively. The Business has current receivables resulting from amounts due from affiliates of $21,259 thousand and $9,295 thousand as of December 31, 2017 and 2016, respectively. |
| • | The Business factors U.S. and non-U.S. receivables through WCS on a recourse and nonrecourse basis pursuant to various factoring and servicing agreements. The Business had factored receivables of $146,221 thousand and $216,967 thousand without recourse as of December 31, 2017 and 2016, respectively. The Business had factored receivables of $3,989 thousand and $4,509 thousand with recourse as of December 31, 2017 and 2016, respectively. For agreements with recourse, the Business establishes a bad debt reserve based on the aging policy discussed in Note 2(F) Current Receivables. Historically, the Business has outsourced our servicing responsibilities to Global Operations AR CoE for a market-based fee and therefore no servicing asset or liability has been recorded on the Combined |
| • | The Business’s North American operations participate in accounts payable programs with TPS. The Business’s liability associated with the funded participation in the accounts payable programs, which is presented as accounts payable within the Combined Statement of Financial Position, was $332,584 thousand and $364,655 thousand as of December 31, 2017 and 2016, respectively. |
| • | The Business participates in GE Treasury centralized hedging and offsetting programs. See Note 12 Derivatives and Hedging. |
| • | Employees of the Business participate in pensions and benefit plans that are sponsored by GE. See Note 17 Pension and Postretirement Benefit Plans. |
| • | GE grants stock options, restricted stock units and performance share units to its group employees, including those of GE Transportation, under the GE Long-Term Incentive Plan. Compensation expense associated with this plan was $4,794 thousand, $6,881 thousand and $8,986 thousand for the years ended December 31, 2017, 2016 and 2015, respectively. |
| • | Lease agreements are based on market terms. The Business incurs rent expense resulting from related party leases with GE or GE entities as lessor. See Note 16 Leases. |
| • | All adjustments relating to certain transactions among the Business, GE and GE entities, which include the transfer of the balance of cash and equivalents to GE, transfer of the balance of cash held in cash pooling arrangements to GE, settlement of intercompany debt between the Business and GE or other GE entities and pushdown of all costs of doing business that were paid on behalf of the Business by GE or GE entities, are classified as Net parent investment. |
| NOTE 5 | CURRENT RECEIVABLES, NET |
|
As of December 31 (In thousands)
|
2017
|
2016
|
|
Customer receivables
|
$86,882
|
$77,782
|
|
Due from GE
|
21,259
|
9,295
|
|
Sundry receivables
|
69,127
|
82,881
|
|
177,268
|
169,958
|
|
|
Less allowance for doubtful accounts
|
(4,882)
|
(7,422)
|
|
Current receivables, net
|
$172,386
|
$162,536
|
| NOTE 6 | INVENTORIES |
|
As of December 31 (In thousands)
|
2017
|
2016
|
|
Raw materials and work in process
|
$268,261
|
$405,154
|
|
Finished goods
|
292,182
|
335,804
|
|
Total inventories
|
$560,443
|
$740,958
|
| NOTE 7 | PROPERTY, PLANT AND EQUIPMENT, NET |
|
Depreciable
Life (in years) |
Original Cost
|
Net Carrying Value
|
|||
|
As of December 31 (In thousands)
|
2017
|
2016
|
2017
|
2016
|
|
|
Land and improvements
|
8(a)
|
$19,857
|
$23,230
|
$16,781
|
$18,467
|
|
Buildings, structures and related equipment
|
8-40
|
565,076
|
518,375
|
337,978
|
336,369
|
|
Machinery and equipment(b)
|
4-20
|
1,305,883
|
1,474,625
|
476,407
|
484,414
|
|
Leasehold costs and manufacturing plant under construction
|
3-10
|
100,597
|
97,709
|
112,002
|
95,265
|
|
Total property, plant and equipment, net
|
$1,991,413
|
$2,113,939
|
$943,168
|
$934,515
|
|
|
ELTO (net)
|
$30,075
|
$220,011
|
$12,135
|
$23,586
|
|
| (a) | Depreciable lives exclude land. |
| (b) | Equipment leased to others (‘‘ELTO’’) is presented in the line item Machinery and equipment. This is equipment we own that is available to lease to customers and is stated at cost less accumulated depreciation. |
| NOTE 8 | GOODWILL AND INTANGIBLE ASSETS |
|
(In thousands)
|
Equipment
|
Services
|
Digital
|
Total
|
|
Balance at December 31, 2015(a)
|
$2,027
|
$112,483
|
$135,594
|
$250,104
|
|
Acquisitions and purchase accounting adjustments
|
—
|
—
|
41,433
|
41,433
|
|
Impairments, currency translation, and other
|
(2,027)
|
—
|
—
|
(2,027)
|
|
Balance at December 31, 2016
|
$—
|
$112,483
|
$177,027
|
$289,510
|
|
Acquisitions and purchase accounting adjustments
|
—
|
—
|
(6,886)
|
(6,886)
|
|
Impairments, currency translation, and other
|
—
|
—
|
—
|
—
|
|
Balance at December 31, 2017
|
$—
|
$112,483
|
$170,141
|
$282,624
|
| (a) | Goodwill is reported net of $286,388 thousand of accumulated impairments at December 31, 2015, all of which occurred in the Equipment segment. |
|
2017
|
2016
|
||||||
|
As of December 31 (In thousands)
|
Useful
Life (in years) |
Gross
Carrying Amount |
Accumulated
Amortization |
Net
|
Gross
Carrying Amount |
Accumulated
Amortization |
Net
|
|
Customer-related
|
11-20
|
$21,860
|
$(7,636)
|
$14,224
|
$40,876
|
$(12,172)
|
$28,704
|
|
Patents & technology
|
7-11
|
56,866
|
(21,419)
|
35,447
|
87,449
|
(49,747)
|
37,702
|
|
Capitalized software - internal-use
|
5
|
211,209
|
(116,151)
|
95,058
|
208,467
|
(93,348)
|
115,119
|
|
Capitalized software - external
|
5-10
|
130,245
|
(20,358)
|
109,887
|
88,325
|
(16,087)
|
72,238
|
|
Trademarks & other
|
18-30
|
286
|
(0)
|
286
|
6,887
|
(2,740)
|
4,147
|
|
Total
|
$420,466
|
$(165,564)
|
$254,902
|
$432,004
|
$(174,094)
|
$257,910
|
|
|
(In thousands)
|
2018
|
2019
|
2020
|
2021
|
2022
|
|
Estimated annual amortization expense
|
$54,526
|
$54,745
|
$43,535
|
$37,036
|
$32,689
|
| NOTE 9 | PREPAID EXPENSES AND OTHER CURRENT ASSETS |
|
As of December 31 (In thousands)
|
2017
|
2016
|
|
Derivative assets
|
$3,303
|
$9,172
|
|
Miscellaneous deferred charges
|
36,807
|
31,179
|
|
Prepaid insurance and other
|
6,080
|
10,494
|
|
Income tax receivable
|
179,394
|
115,937
|
|
Other
|
696
|
18,633
|
|
Prepaid expenses and other current assets
|
$226,280
|
$185,415
|
| NOTE 10 | OTHER ASSETS |
|
As of December 31 (In thousands)
|
2017
|
2016
|
|
Associated companies
|
$56,428
|
$6,859
|
|
Other assets(a)
|
21,331
|
14,136
|
|
Total other assets
|
$77,759
|
$20,995
|
| (a) | Other assets consists of long-term prepaid expenses, advances to suppliers and non-current value added tax receivables. |
| NOTE 11 | BORROWINGS |
|
As of December 31 (In thousands)
|
2017
|
2016
|
|
Current portion of long-term borrowings
|
$45
|
$120
|
|
Bank borrowings and other
|
—
|
21,620
|
|
Total short-term borrowings
|
$45
|
$21,740
|
|
As of December 31 (In thousands)
|
2017
|
2016
|
|
|
Maturities
|
|||
|
Long-term portion of borrowings
|
2019-2020
|
$44,257
|
$92,772
|
|
Total long-term borrowings
|
$44,257
|
$92,772
|
| NOTE 12 | DERIVATIVES AND HEDGING |
|
At December 31,
|
||||
|
2017
|
2016
|
|||
|
(In thousands)
|
Prepaid expenses
and other current assets |
Other
current liabilities |
Prepaid expenses
and other current assets |
Other
current liabilities |
|
Fair Value
|
||||
|
Currency exchange and commodity contracts
|
$3,303
|
$6,372
|
$9,172
|
$8,056
|
| NOTE 13 | INCOME TAXES |
|
(In thousands)
|
2017
|
2016
|
2015
|
|
U.S.
|
$280,346
|
$619,667
|
$839,500
|
|
Non-U.S.
|
152,053
|
87,850
|
(2,601)
|
|
Total earnings
|
$432,399
|
$707,517
|
$836,899
|
|
(In thousands)
|
2017
|
2016
|
2015
|
|
Current
|
|||
|
U.S. Federal
|
$70,879
|
$61,949
|
$248,238
|
|
U.S. State and Local
|
20,202
|
33,362
|
43,290
|
|
Non-U.S.
|
92,028
|
55,838
|
48,411
|
|
Deferred
|
|||
|
U.S. Federal
|
(118,361)
|
7,305
|
(14,775)
|
|
U.S. State and Local
|
(1,564)
|
5,088
|
(1,151)
|
|
Non-U.S.
|
(18,881)
|
3,886
|
25,262
|
|
Total
|
$44,303
|
$167,428
|
$349,275
|
|
(In thousands)
|
2017
|
2016
|
2015
|
|
Income before taxes
|
$432,399
|
$707,517
|
$836,899
|
|
Tax expected at 35%
|
151,340
|
247,631
|
292,915
|
|
Foreign operations and Foreign Tax Credits
|
843
|
(119,780)
|
(675)
|
|
State taxes
|
12,115
|
24,992
|
27,662
|
|
U.S. Tax Reform
|
(108,714)
|
—
|
—
|
|
Domestic manufacturing deduction benefits
|
(2,610)
|
(16,214)
|
(19,843)
|
|
Research & Development benefits
|
(4,147)
|
(1,601)
|
(3,223)
|
|
Valuation allowance
|
6,459
|
25,794
|
50,441
|
|
Other
|
(10,983)
|
6,606
|
1,998
|
|
Total income tax
|
$44,303
|
$167,428
|
$349,275
|
|
Actual Income tax rate
|
10%
|
24%
|
42%
|
|
Liability (In thousands)
|
2017
|
2016
|
|
Unrecognized tax benefits
|
$(5,717)
|
$(4,802)
|
|
Accrued interest on unrecognized tax benefits
|
(2,222)
|
(2,565)
|
|
Accrued penalties on unrecognized tax benefits
|
(1,446)
|
(1,629)
|
|
Reasonably possible reduction to the balance of unrecognized tax benefits in succeeding 12 months
|
—
|
—
|
|
Portion that, if recognized, would reduce tax expense and effective tax rate
|
(5,717)
|
(4,802)
|
|
(In thousands)
|
2017
|
2016
|
|
Balance at January 1
|
$(4,802)
|
$(4,465)
|
|
Additions for tax positions of the current year
|
—
|
—
|
|
Additions for tax positions of prior years
|
(1,320)
|
(561)
|
|
Reductions for tax positions of prior years
|
405
|
224
|
|
Settlements with tax authorities
|
—
|
—
|
|
Expiration of the statute of limitations
|
—
|
—
|
|
Balance at December 31
|
$(5,717)
|
$(4,802)
|
|
(In thousands)
|
2017
|
2016
|
|
Assets
|
$6,770
|
$1,322
|
|
Liabilities
|
(173,513)
|
(303,526)
|
|
Net deferred income tax (liability)
|
$(166,743)
|
$(302,204)
|
|
(In thousands)
|
2017
|
2016
|
|
Deferred tax assets
|
||
|
Goodwill & other intangibles
|
$88,232
|
$72,246
|
|
Operating loss carryforwards
|
56,783
|
54,098
|
|
Employee benefits
|
12,373
|
16,230
|
|
Other
|
—
|
319
|
|
Total deferred income tax asset
|
157,388
|
142,893
|
|
Valuation allowances
|
(150,618)
|
(141,571)
|
|
Total deferred income tax asset after valuation allowance
|
$6,770
|
$1,322
|
|
Deferred tax liabilities
|
||
|
Goodwill and other intangibles
|
$(21,888)
|
$(32,185)
|
|
Property
|
(80,075)
|
(162,055)
|
|
Receivables
|
(41,374)
|
(73,755)
|
|
Inventory
|
(3,433)
|
(25,468)
|
|
Other accrued expenses
|
(15,059)
|
(10,063)
|
|
Other
|
(11,684)
|
—
|
|
Total deferred income tax liability
|
$(173,513)
|
$(303,526)
|
|
Net deferred income tax liability
|
$(166,743)
|
$(302,204)
|
| NOTE 14 | OTHER CURRENT LIABILITIES AND OTHER LIABILITIES |
|
As of December 31 (In thousands)
|
2017
|
2016
|
|
Employee related liabilities(a)
|
$90,801
|
$105,796
|
|
Derivative liabilities
|
6,372
|
8,056
|
|
Discounts and allowances
|
14,132
|
2,593
|
|
Accrued taxes
|
47,113
|
41,642
|
|
Accrued costs for freight, utility & other
|
28,563
|
30,735
|
|
Warranties
|
49,564
|
25,672
|
|
Restructuring and sundry losses(b)
|
24,032
|
17,689
|
|
Other current liabilities(c)
|
22,146
|
9,118
|
|
Total other current liabilities
|
$282,723
|
$241,301
|
| (a) | Employee related liabilities are largely comprised of payroll, employee compensation and benefits, pension and other postretirement benefit obligations. |
| (b) | Restructuring accruals and accruals for legal costs arising from claims, assessments, litigation, fines and penalties and other sources and are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. See Note 18 Restructuring and Other Activities. |
| (c) | Other current liabilities primarily consists of professional fees and various other accruals. |
|
As of December 31 (In thousands)
|
2017
|
2016
|
|
Employee related liabilities(a)
|
$27,135
|
$31,374
|
|
Sundry losses(b)
|
8,503
|
11,973
|
|
Warranties
|
30,753
|
75,820
|
|
Tax related liabilities(c)
|
7,163
|
6,431
|
|
Other liabilities(d)
|
18,637
|
16,891
|
|
Total other liabilities
|
$92,191
|
$142,489
|
| (a) | Employee related liabilities are largely comprised of long-term employee compensation programs. |
| (b) | Consists of accruals for legal costs and various other accruals. |
| (c) | Consists of reserves for uncertain tax positions. |
| (d) | Other liabilities primarily consist of holdbacks and earn-outs. |
| NOTE 15 | COMMITMENTS AND CONTINGENCIES |
|
(In thousands)
|
2017
|
2016
|
|
Balance at January 1
|
$101,492
|
$120,172
|
|
Current year provisions
|
54,346
|
50,359
|
|
Utilizations and other
|
(75,521)
|
(69,039)
|
|
Balance at December 31
|
$80,317
|
$101,492
|
|
(In thousands)
|
2018
|
2019
|
2020
|
2021
|
2022
|
|
Purchase obligations
|
$19,436
|
$90
|
$—
|
$22,669
|
$1,300
|
| NOTE 16 | LEASES |
|
For the years ended December 31 (In thousands)
|
Total
|
|
Due in
|
|
|
2018
|
$23,670
|
|
2019
|
15,081
|
|
2020
|
9,002
|
|
2021
|
8,641
|
|
2022
|
7,274
|
|
2023 and thereafter
|
36,429
|
|
Total
|
$100,097
|
| NOTE 17 | PENSION AND POSTRETIREMENT BENEFIT PLANS |
| NOTE 18 | RESTRUCTURING AND OTHER ACTIVITIES |
|
For the years ended December 31
|
|||
|
(In Thousands)
|
2017
|
2016
|
2015
|
|
Equipment
|
|||
|
Asset impairment
|
$73,576
|
$81,774
|
$3,922
|
|
Contract termination costs
|
33
|
19,359
|
—
|
|
Employee separation expense
|
24,522
|
29,375
|
8,861
|
|
Total Equipment
|
$98,131
|
$130,508
|
$12,783
|
|
Services
|
|||
|
Asset impairment
|
12,748
|
21,141
|
68
|
|
Contract termination costs
|
—
|
—
|
—
|
|
Employee separation expense
|
14,977
|
24,100
|
2,095
|
|
Total Services
|
$27,725
|
$45,241
|
$2,163
|
|
Digital
|
|||
|
Asset impairment
|
17,971
|
1,544
|
—
|
|
Contract termination costs
|
—
|
—
|
—
|
|
Employee separation expense
|
1,021
|
600
|
39
|
|
Total Digital
|
$18,992
|
$2,144
|
$39
|
|
Total
|
$144,848
|
$177,893
|
$14,985
|
| NOTE 19 | SEGMENT INFORMATION AND MAJOR CUSTOMERS |
|
Total revenues
|
|||
|
For the years ended December 31
|
|||
|
(In Thousands)
|
2017
|
2016
|
2015
|
|
Equipment
|
$1,767,968
|
$2,444,240
|
$3,180,942
|
|
Services
|
1,886,955
|
1,891,540
|
1,999,740
|
|
Digital
|
320,406
|
344,854
|
339,423
|
|
Eliminations
|
(45,021)
|
(74,043)
|
(98,626)
|
|
Total revenues
|
$3,930,308
|
$4,606,591
|
$5,421,479
|
|
For the years ended December 31
|
|||
|
(In Thousands)
|
2017
|
2016
|
2015
|
|
Equipment
|
$(28,907)
|
$142,508
|
$130,407
|
|
Services
|
603,344
|
683,824
|
710,709
|
|
Digital
|
27,181
|
93,418
|
119,603
|
|
Segment profit
|
$601,618
|
$919,750
|
$960,719
|
|
Non-operating benefit costs
|
(16,877)
|
(18,455)
|
(16,249)
|
|
Impairment of goodwill
|
—
|
(2,027)
|
(85,421)
|
|
Restructuring costs
|
(144,848)
|
(177,893)
|
(14,985)
|
|
Interest expense and other finance charges
|
(21,805)
|
(20,002)
|
(14,712)
|
|
Provision for income taxes
|
(44,303)
|
(167,428)
|
(349,275)
|
|
Net earnings attributable to Parent
|
$373,785
|
$533,945
|
$480,077
|
|
Depreciation and amortization
|
|||
|
For the years ended December 31
|
|||
|
(In Thousands)
|
2017
|
2016
|
2015
|
|
Equipment
|
$119,657
|
$166,405
|
$146,305
|
|
Services
|
47,903
|
39,596
|
45,994
|
|
Digital
|
16,452
|
13,627
|
16,600
|
|
Total
|
$184,012
|
$219,628
|
$208,899
|
| NOTE 20 | SUBSEQUENT EVENTS |
|
For the three months ended June 30 (In thousands)
|
2018
|
2017
|
|
Revenues
|
||
|
Sales of goods
|
$570,726
|
$621,046
|
|
Sales of services
|
346,278
|
344,212
|
|
Total revenues (Note 3)
|
917,004
|
965,258
|
|
Costs of revenues
|
||
|
Cost of goods sold
|
447,233
|
496,339
|
|
Cost of services sold
|
211,798
|
218,676
|
|
Gross profit
|
257,973
|
250,243
|
|
Selling, general and administrative expenses
|
142,746
|
116,194
|
|
Non-operating benefit costs
|
2,504
|
8,532
|
|
Other (expense) income
|
(6,623)
|
(11,492)
|
|
Earnings before income taxes
|
106,100
|
114,025
|
|
Provision for income taxes (Note 14)
|
(19,965)
|
(30,853)
|
|
Net earnings
|
86,135
|
83,172
|
|
Less net earnings attributable to noncontrolling interests
|
580
|
4,002
|
|
Net earnings attributable to Parent
|
$85,555
|
$79,170
|
|
For the six months ended June 30 (In thousands)
|
2018
|
2017
|
|
Revenues
|
||
|
Sales of goods
|
$1,101,781
|
$1,312,160
|
|
Sales of services
|
672,107
|
668,425
|
|
Total revenues (Note 3)
|
1,773,888
|
1,980,585
|
|
Costs of revenues
|
||
|
Cost of goods sold
|
881,336
|
1,116,321
|
|
Cost of services sold
|
405,955
|
446,245
|
|
Gross profit
|
486,597
|
418,019
|
|
Selling, general and administrative expenses
|
264,770
|
228,713
|
|
Non-operating benefit costs
|
5,155
|
11,262
|
|
Other (expense) income
|
(4,362)
|
(20,961)
|
|
Earnings before income taxes
|
212,310
|
157,083
|
|
Provision for income taxes (Note 14)
|
(44,084)
|
(56,984)
|
|
Net earnings
|
168,226
|
100,099
|
|
Less net earnings attributable to noncontrolling interests
|
4,136
|
6,811
|
|
Net earnings attributable to Parent
|
$164,090
|
$93,288
|
|
For the three months ended June 30 (In thousands)
|
2018
|
2017
|
|
Net earnings
|
$86,135
|
$83,172
|
|
Less net earnings attributable to noncontrolling interests
|
580
|
4,002
|
|
Net earnings attributable to Parent
|
85,555
|
79,170
|
|
Other comprehensive (loss) income
|
||
|
Foreign currency translation adjustments
|
(31,893)
|
2,733
|
|
Benefit plans, net of taxes
|
48
|
576
|
|
Other comprehensive (loss) income, net of taxes
|
(31,844)
|
3,309
|
|
Less other comprehensive loss attributable to noncontrolling interests
|
(4,180)
|
(485)
|
|
Other comprehensive (loss) income attributable to Parent
|
(27,665)
|
3,794
|
|
Comprehensive income
|
54,290
|
86,481
|
|
Less comprehensive (loss) income attributable to noncontrolling interests
|
(3,600)
|
3,517
|
|
Comprehensive income attributable to Parent
|
$57,890
|
$82,964
|
|
For the six months ended June 30 (In thousands)
|
2018
|
2017
|
|
Net earnings
|
$168,226
|
$100,099
|
|
Less net earnings attributable to noncontrolling interests
|
4,136
|
6,811
|
|
Net earnings attributable to Parent
|
164,090
|
93,288
|
|
Other comprehensive (loss) income
|
||
|
Foreign currency translation adjustments
|
(20,849)
|
20,078
|
|
Benefit plans, net of taxes
|
2,173
|
772
|
|
Other comprehensive (loss) income, net of taxes
|
(18,676)
|
20,850
|
|
Less other comprehensive (loss) income attributable to noncontrolling interests
|
(2,400)
|
1,331
|
|
Other comprehensive (loss) income attributable to Parent
|
(16,276)
|
19,519
|
|
Comprehensive income
|
149,550
|
120,949
|
|
Less comprehensive income attributable to noncontrolling interests
|
1,736
|
8,142
|
|
Comprehensive income attributable to Parent
|
$147,814
|
$112,807
|
|
(In thousands)
|
Net Parent
Investment |
Accumulated
Other Comprehensive Income / (Loss) |
Equity
Attributable to Noncontrolling Interests |
Total
Equity |
|
Balances as of January 1, 2017
|
$1,425,679
|
$(70,916)
|
$28,201
|
$1,382,964
|
|
Net earnings
|
93,288
|
—
|
6,811
|
100,099
|
|
Foreign currency translation adjustments
|
—
|
18,742
|
1,336
|
20,078
|
|
Benefit plans, net of taxes
|
—
|
777
|
(5)
|
772
|
|
Transfers (to) from Parent
|
221,471
|
—
|
—
|
221,471
|
|
Changes in equity attributable to noncontrolling interests
|
—
|
—
|
11,182
|
11,182
|
|
Total equity balance as of June 30, 2017
|
$1,740,438
|
$(51,397)
|
$47,525
|
$1,736,566
|
|
Balances as of January 1, 2018
|
$1,687,151
|
$(55,592)
|
$41,664
|
$1,673,223
|
|
Net earnings
|
164,090
|
—
|
4,136
|
168,226
|
|
Foreign currency translation adjustments
|
—
|
(18,432)
|
(2,417)
|
(20,849)
|
|
Benefit plans, net of taxes
|
—
|
2,156
|
17
|
2,173
|
|
Transfers (to) from Parent
|
6,499
|
—
|
—
|
6,499
|
|
Changes in equity attributable to noncontrolling interests
|
—
|
—
|
1,302
|
1,302
|
|
Total equity balance as of June 30, 2018
|
$1,857,740
|
$(71,868)
|
$44,702
|
$1,830,574
|
|
(In thousands)
|
June 30,
2018 (Unaudited) |
December 31,
2017 |
|
Assets
|
||
|
Cash, cash equivalents and restricted cash
|
$131,516
|
$105,338
|
|
Current receivables, net (Note 6)
|
207,527
|
172,386
|
|
Inventories (Note 7)
|
675,156
|
560,443
|
|
Contract and other deferred assets (Note 3)
|
581,100
|
535,442
|
|
Prepaid expenses and other current assets (Note 10)
|
230,426
|
226,280
|
|
Total current assets
|
1,825,725
|
1,599,889
|
|
Property, plant and equipment, net (Note 8)
|
931,717
|
943,168
|
|
Goodwill and intangible assets (Note 9)
|
536,192
|
537,526
|
|
Long-term contract and other deferred assets (Note 3)
|
400,933
|
321,392
|
|
Deferred income taxes (Note 14)
|
64,410
|
64,839
|
|
Other assets (Note 11)
|
80,294
|
77,759
|
|
Total assets
|
$3,839,271
|
$3,544,573
|
|
Liabilities and equity
|
||
|
Short-term borrowings (Note 12)
|
$24
|
$45
|
|
Accounts payable
|
706,706
|
604,328
|
|
Progress collections and deferred income (Note 3)
|
619,410
|
592,427
|
|
Other current liabilities (Note 15)
|
284,247
|
282,723
|
|
Total current liabilities
|
1,610,387
|
1,479,523
|
|
Long-term borrowings (Note 12)
|
67,509
|
44,257
|
|
Long-term progress collections and other deferred income (Note 3)
|
17,333
|
23,797
|
|
Deferred income taxes (Note 14)
|
224,716
|
231,582
|
|
Other liabilities (Note 15)
|
88,752
|
92,191
|
|
Total liabilities
|
2,008,697
|
1,871,350
|
|
Net parent investment
|
1,857,740
|
1,687,151
|
|
Accumulated other comprehensive loss
|
(71,868)
|
(55,592)
|
|
Total equity attributable to Parent
|
1,785,872
|
1,631,559
|
|
Equity attributable to noncontrolling interests
|
44,702
|
41,664
|
|
Total equity
|
1,830,574
|
1,673,223
|
|
Total liabilities and equity
|
$3,839,271
|
$3,544,573
|
|
For the six months ended June 30 (In thousands)
|
2018
|
2017
|
|
Cash flows - operating activities
|
||
|
Net earnings
|
$168,226
|
$100,099
|
|
Less net earnings attributable to noncontrolling interests
|
4,136
|
6,811
|
|
Net earnings attributable to the Parent
|
164,090
|
93,288
|
|
Adjustments to reconcile net earnings attributable to the Parent to cash provided by (used for) operating activities:
|
||
|
Depreciation and amortization expenses
|
78,183
|
86,754
|
|
Unrealized losses from derivative instruments
|
1,620
|
4,205
|
|
Share-based compensation expense
|
5,524
|
3,754
|
|
Deferred income taxes
|
(6,436)
|
(30,647)
|
|
Gains from sale of property, plant and equipment
|
(955)
|
(2,103)
|
|
Gains from disposal of business
|
(5,614)
|
—
|
|
Changes in operating assets and liabilities:
|
||
|
(Increase) decrease in current receivables
|
(57,126)
|
23,295
|
|
(Increase) decrease in inventories
|
(101,767)
|
43,361
|
|
(Increase) in contract and other deferred assets
|
(123,045)
|
(11,680)
|
|
(Increase) in prepaid expenses and other assets
|
(1,311)
|
(62,453)
|
|
Increase (decrease) in accounts payable
|
134,175
|
(48,450)
|
|
Increase (decrease) in progress collections and other deferred income
|
23,806
|
(104,457)
|
|
(Increase) decrease in other liabilities
|
(10,130)
|
(23,314)
|
|
All other operating activities
|
(24,578)
|
(5,673)
|
|
Cash provided by (used for) operating activities
|
76,436
|
(34,120)
|
|
Cash flows - investing activities
|
||
|
Additions to property, plant and equipment
|
(56,041)
|
(71,022)
|
|
Dispositions of property, plant and equipment
|
1,315
|
4,099
|
|
Additions to software
|
(19,040)
|
(30,885)
|
|
Proceeds from principal business dispositions
|
5,687
|
—
|
|
Investment in associated companies
|
(323)
|
(50,104)
|
|
All other investing activities
|
9
|
3,939
|
|
Cash (used for) investing activities
|
(68,393)
|
(143,973)
|
|
Cash flows - financing activities
|
||
|
Newly issued debt (maturities longer than 90 days)
|
24,570
|
—
|
|
Repayments and other reductions (maturities longer than 90 days)
|
—
|
(5,167)
|
|
Transfers (to) from Parent
|
6,499
|
221,471
|
|
All other financing activities
|
(10,521)
|
12,922
|
|
Cash provided by financing activities
|
20,548
|
229,226
|
|
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash
|
(2,413)
|
10,139
|
|
Increase in cash, cash equivalents and restricted cash
|
26,178
|
61,272
|
|
Cash, cash equivalents and restricted cash at beginning of year
|
105,338
|
151,151
|
|
Cash, cash equivalents and restricted cash at June 30
|
$131,516
|
$212,423
|
|
Supplemental disclosure of cash flow information
|
||
|
Cash paid during the six months ended June 30 for interest on borrowings
|
$—
|
$(947)
|
|
Cash paid during the six months ended June 30 for income taxes
|
$(78,720)
|
$(131,902)
|
| NOTE 1 | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION |
| NOTE 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| (A) | RECENT ACCOUNTING PRONOUNCEMENTS REFLECTED IN THESE CONDENSED COMBINED FINANCIAL STATEMENTS |
| • | ASU No. 2014-09, Revenue from Contracts with Customers. Refer to Note 3 Revenue Related to Contracts with Customers for more details. |
| • | ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. Refer to the combined annual financial statements for more details. |
| • | ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. Refer to the combined annual financial statements for more details. |
| • | ASU 2017-07, Compensation—Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. Refer to the combined annual financial statements for more details. |
| • | ASU 2015-11, Inventory (Topic 330), Simplifying of the Measurement of Inventory. Refer to the combined annual financial statements for more details. |
| • | ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. Refer to the combined annual financial statements for more details. |
| • | ASU 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes. Refer to the combined annual financial statements for more details. |
| • | ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU provides a new framework that will assist in the evaluation of whether business combination transactions should be accounted as acquisition of a business or a group of assets, as well as specifying the minimum required inputs and processes necessary to be a business. The provisions of this ASU are effective for years beginning after December 15, 2017. All disposals in the current period were accounted for under the provision of the new guidance. |
| • | ASU 2016-16, Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory. This standard amends existing guidance on income taxes to require the accounting for the income tax effects of intercompany sales and transfers of assets other than inventory when the transfer occurs. As a result, the tax expense from the intercompany sale of assets, other than inventory, and associated changes to deferred taxes will be recognized when the sale occurs even though the pre-tax effects of the transaction have not been recognized. The pronouncement is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods, with early adoption permitted at the beginning of an annual period for which no financial statements have already been issued. This amendment has been applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption, which did not have an impact on our historical results. |
| • | ASU 2016-18, Statement of Cash Flows: Restricted Cash. This standard requires the changes in the total of cash and restricted cash to be presented in the statement of cash flows. In addition, when cash and restricted cash are presented on separate lines on the balance sheet, an entity is required to reconcile the totals in the statement of cash flows to the related line items in the balance sheet. While not a direct effect of the adoption of the standard, to simplify the reconciliation of the statement of cash flows to the cash balances presented in our statement of financial position, we have elected to present cash and restricted cash as a single line on the balance sheet, which did not have an impact on our historical results. |
| (B) | OTHER RECENT ACCOUNTING PRONOUNCEMENTS |
| NOTE 3 | REVENUE RELATED TO CONTRACTS WITH CUSTOMERS |
|
For the three months ended June 30,
(In thousands) |
Equipment
|
Services
|
Digital
|
Total
|
|
|
U.S.
|
2018
|
$144,998
|
$321,577
|
$51,831
|
$518,406
|
|
2017
|
180,089
|
332,028
|
48,765
|
560,882
|
|
|
Europe
|
2018
|
7,849
|
1,873
|
(451)
|
9,271
|
|
2017
|
19,763
|
1,166
|
1,371
|
22,300
|
|
|
Asia
|
2018
|
57,092
|
63,243
|
840
|
121,175
|
|
2017
|
32,941
|
46,880
|
696
|
80,517
|
|
|
Other
|
2018
|
111,529
|
143,881
|
12,742
|
268,152
|
|
2017
|
180,960
|
106,123
|
14,476
|
301,559
|
|
|
Total revenue
|
2018
|
$321,468
|
$530,574
|
$64,962
|
$917,004
|
|
2017
|
413,753
|
486,197
|
65,308
|
965,258
|
|
For the six months ended June 30,
(In thousands) |
Equipment
|
Services
|
Digital
|
Total
|
|
|
U.S.
|
2018
|
$257,802
|
$646,349
|
$83,896
|
$988,047
|
|
2017
|
442,063
|
561,100
|
98,734
|
1,101,897
|
|
|
Europe
|
2018
|
14,574
|
1,796
|
700
|
17,070
|
|
2017
|
34,200
|
3,053
|
2,010
|
39,263
|
|
|
Asia
|
2018
|
141,252
|
115,830
|
3,632
|
260,714
|
|
2017
|
171,927
|
115,542
|
1,367
|
288,836
|
|
|
Other
|
2018
|
185,833
|
273,159
|
49,065
|
508,057
|
|
2017
|
313,692
|
211,640
|
25,257
|
550,589
|
|
|
Total revenue
|
2018
|
$599,461
|
$1,037,134
|
$137,293
|
$1,773,888
|
|
2017
|
961,882
|
891,335
|
127,368
|
1,980,585
|
|
(in thousands)
|
June 30,
2018 |
December 31,
2017 |
|
Contractual service agreements(a)
|
$348,538
|
$416,199
|
|
Equipment contract revenue(b)
|
201,336
|
79,588
|
|
Deferred inventory costs(c)
|
31,226
|
39,655
|
|
Total contract and other deferred assets
|
$581,100
|
$535,442
|
|
Long-term contractual service agreements(a)
|
$268,122
|
$193,389
|
|
Long-term equipment contract revenue(b)
|
37,680
|
33,484
|
|
Long-term non-recurring engineering costs(d)
|
95,131
|
86,868
|
|
Other
|
—
|
7,651
|
|
Total long-term contract and other deferred assets
|
$400,933
|
$321,392
|
|
Progress collections(e)
|
$601,655
|
$564,971
|
|
Deferred income
|
17,755
|
27,456
|
|
Total progress collections and deferred income
|
$619,410
|
$592,427
|
|
Long-term progress collections(e)
|
$17,071
|
$20,740
|
|
Long-term deferred income
|
262
|
3,057
|
|
Total long-term progress collections and other deferred income
|
$17,333
|
$23,797
|
|
Total contract and other deferred assets, net
|
$345,290
|
$240,610
|
| (a) | Reflects revenues earned in excess of billings on our CSAs in our Services segment. |
| (b) | Reflects revenues earned in excess of billings primarily on our long-term contracts to construct equipment principally in our Equipment and Digital segments. |
| (c) | Represents cost deferral for shipped goods and other costs for which the criteria for revenue recognition has not yet been met. |
| (d) | Includes fulfillment costs incurred prior to production (e.g., engineering costs specific to an individual customer’s contract) for long-term equipment production contracts, primarily within our Equipment segment. |
| (e) | Includes billings in excess of revenue on our long-term equipment and CSAs. |
| • | Equipment - total remaining performance obligations of $5,377,356 thousand of which 73% is expected to be satisfied within 5 year(s) and the remaining thereafter. |
| • | Services - total remaining performance obligations of $9,761,717 thousand of which 49% is expected to be satisfied within 5 year(s), 78% within 10 year(s) and the remaining thereafter. |
| • | Digital - total remaining performance obligations of $476,057 thousand of which 82% is expected to be satisfied within 5 year(s) and the remaining thereafter. |
| NOTE 4 | CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
| NOTE 5 | RELATED PARTY TRANSACTIONS |
| • | Amounts for due to / due from affiliates are recorded in Accounts payable and Current receivables, and are settled in cash. The Business has accounts payable resulting from amounts due to affiliates of |
| • | The Business factors U.S. and non-U.S. receivables through its Working Capital Solutions (‘‘WCS’’), on a recourse and nonrecourse basis pursuant to various factoring and servicing agreements. The Business had factored receivables of $134,370 thousand and $146,221 thousand without recourse as of June 30, 2018 and December 31, 2017, respectively. The Business had factored receivables of $3,477 thousand and $3,989 thousand with recourse as of June 30, 2018 and December 31, 2017, respectively. For agreements with recourse, the Business establishes a bad debt reserve based on the aging policy. Historically, the Business has outsourced our servicing responsibilities to Global Operations AR CoE for a market-based fee, and therefore, no servicing asset or liability has been recorded on the Unaudited Condensed Combined Statement of Financial Position as of June 30, 2018 and December 31, 2017. Under the programs, the Business incurred interest expense and finance charges of $3,787 thousand and $8,514 thousand for the three months ended June 30, 2018 and 2017, respectively, and $6,694 thousand and $14,049 thousand for the six months ended June 30, 2018 and 2017, respectively, which are included in Other (expense) income. |
| • | The Business’s North American operations participate in accounts payable programs with Trade Payables Services (‘‘TPS’’). The Business’s liability associated with the funded participation in the accounts payable programs, which is presented as accounts payable within the Condensed Combined Statement of Financial Position, was $411,878 thousand and $332,584 thousand as of June 30, 2018 and December 31, 2017, respectively. |
| • | The Business participates in GE Treasury centralized hedging and offsetting programs. See Note 13 Derivatives and Hedging. |
| • | Employees of the Business participate in pensions and benefit plans that are sponsored by GE. See Note 18 Pension and Postretirement Benefit Plans. |
| • | GE grants stock options, restricted stock units and performance share units to its group employees, including those of GE Transportation, under the GE Long-Term Incentive Plan. |
| • | Lease agreements are based on market terms. The Business incurs rent expense resulting from related party leases with GE or GE entities as lessor. See Note 17 Leases. |
| • | All adjustments relating to certain transactions among the Business, GE and GE entities, which include the transfer of the balance of cash and equivalents to GE, transfer of the balance of cash held in cash pooling arrangements to GE, settlement of intercompany debt between the Business and GE or other GE entities and pushdown of all costs of doing business that were paid on behalf of the Business by GE or GE entities, are classified as Net parent investment. |
| NOTE 6 | CURRENT RECEIVABLES, NET |
|
(In thousands)
|
June 30,
2018 |
December 31,
2017 |
|
Customer receivables
|
$123,950
|
$86,882
|
|
Due from GE
|
31,952
|
21,259
|
|
Sundry receivables
|
60,037
|
69,127
|
|
215,939
|
177,268
|
|
|
Less allowance for doubtful accounts
|
(8,412)
|
(4,882)
|
|
Current receivables, net
|
$207,527
|
$172,386
|
| NOTE 7 | INVENTORIES |
|
(In thousands)
|
June 30,
2018 |
December 31,
2017 |
|
Raw materials and work in process
|
$391,627
|
$268,261
|
|
Finished goods
|
283,529
|
292,182
|
|
Total inventories
|
$675,156
|
$560,443
|
| NOTE 8 | PROPERTY, PLANT AND EQUIPMENT, NET |
|
Depreciable
Life (in years) |
Original Cost
|
Net Carrying Value
|
|||
|
(In thousands)
|
June 30,
2018 |
December 31,
2017 |
June 30,
2018 |
December 31,
2017 |
|
|
Land and improvements
|
8(a)
|
$18,115
|
$19,857
|
$15,443
|
$16,781
|
|
Buildings, structures and related equipment
|
8-40
|
571,770
|
565,076
|
343,984
|
337,978
|
|
Machinery and equipment(b)
|
4-20
|
1,252,344
|
1,305,883
|
464,898
|
476,407
|
|
Leasehold costs and manufacturing
plant under construction |
3-10
|
118,445
|
100,597
|
107,392
|
112,002
|
|
Total property, plant and equipment, net
|
$1,960,674
|
$1,991,413
|
$931,717
|
$943,168
|
|
|
ELTO (net)
|
$29,101
|
$30,075
|
$14,337
|
$12,135
|
|
| (a) | Depreciable lives exclude land. |
| (b) | Equipment leased to others (‘‘ELTO’’) is presented in the line item Machinery and equipment. This is equipment we own that is available to lease to customers and is stated at cost less accumulated depreciation. |
| NOTE 9 | INTANGIBLE ASSETS |
|
Useful
Life (in years) |
June 30, 2018
|
December 31, 2017
|
|||||
|
(In thousands)
|
Gross
Carrying Amount |
Accumulated
Amortization |
Net
|
Gross
Carrying Amount |
Accumulated
Amortization |
Net
|
|
|
Customer-related
|
11-20
|
$21,818
|
$(8,338)
|
$13,480
|
$21,860
|
$(7,636)
|
$14,224
|
|
Patents & technology
|
7-11
|
58,800
|
(26,056)
|
32,744
|
56,866
|
(21,419)
|
35,447
|
|
Capitalized software - internal-use
|
5
|
219,134
|
(130,174)
|
88,960
|
211,209
|
(116,151)
|
95,058
|
|
Capitalized software - external
|
5-10
|
144,060
|
(25,953)
|
118,107
|
130,245
|
(20,358)
|
109,887
|
|
Trademarks & other
|
18-30
|
277
|
—
|
277
|
286
|
—
|
286
|
|
Total
|
$444,089
|
$(190,521)
|
$253,568
|
$420,466
|
$(165,564)
|
$254,902
|
|
| NOTE 10 | PREPAID EXPENSES AND OTHER CURRENT ASSETS |
|
(In thousands)
|
June 30,
2018 |
December 31,
2017 |
|
Derivative assets
|
$65
|
$3,303
|
|
Miscellaneous deferred charges
|
33,944
|
36,807
|
|
Prepaid insurance and other
|
5,197
|
6,080
|
|
Income tax receivable
|
183,641
|
179,394
|
|
Other
|
7,579
|
696
|
|
Prepaid expenses and other current assets
|
$230,426
|
$226,280
|
| NOTE 11 | OTHER ASSETS |
|
(In thousands)
|
June 30,
2018 |
December 31,
2017 |
|
Associated companies(a)
|
$57,334
|
$56,428
|
|
Other assets(b)
|
22,960
|
21,331
|
|
Total other assets
|
$80,294
|
$77,759
|
| (a) | Associated companies are entities in which we do not have a controlling financial interest, but over which we have significant influence, most often because we hold a voting interest of 20% to 50%. |
| (b) | Other assets mainly consist of long-term prepaid expenses and non-current value added tax receivables. |
| NOTE 12 | BORROWINGS |
|
(In thousands)
|
June 30,
2018 |
December 31,
2017 |
|
Current portion of long-term borrowings
|
$24
|
$45
|
|
Total short-term borrowings
|
$24
|
$45
|
|
(In thousands)
|
June 30,
2018 |
December 31,
2017 |
|
|
Long-term portion of borrowings
|
Maturities
2019-2020 |
$67,509
|
$44,257
|
|
Total long-term borrowings
|
$67,509
|
$44,257
|
| NOTE 13 | DERIVATIVES AND HEDGING |
|
June 30, 2018
|
December 31, 2017
|
|||
|
(In thousands)
|
Prepaid expenses
and other current assets |
Other
current liabilities |
Prepaid expenses
and other current assets |
Other
current liabilities |
|
Fair Value
|
||||
|
Currency exchange and commodity contracts
|
$65
|
$11,530
|
$3,303
|
$6,372
|
| NOTE 14 | INCOME TAXES |
| NOTE 15 | OTHER CURRENT LIABILITIES AND OTHER LIABILITIES |
|
(In thousands)
|
June 30,
2018 |
December 31,
2017 |
|
Employee related liabilities(a)
|
$122,861
|
$90,801
|
|
Derivative liabilities
|
11,530
|
6,372
|
|
Discounts and allowances
|
11,119
|
14,132
|
|
Accrued taxes
|
48,258
|
47,113
|
|
Accrued costs for freight, utility & other
|
25,975
|
28,563
|
|
Warranties
|
23,132
|
49,564
|
|
Restructuring and sundry losses(b)
|
16,277
|
24,032
|
|
Other current liabilities(c)
|
25,095
|
22,146
|
|
Total other current liabilities
|
$284,247
|
$282,723
|
| (a) | Employee related liabilities are largely comprised of payroll, employee compensation and benefits, pension and other postretirement benefit obligations. |
| (b) | Restructuring accruals and accruals for legal costs arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. |
| (c) | Other current liabilities primarily consist of accruals related to prior acquisitions and investments, as well as various other miscellaneous accruals. |
|
(In thousands)
|
June 30,
2018 |
December 31,
2017 |
|
Employee related liabilities(a)
|
$21,237
|
$27,135
|
|
Sundry losses
|
684
|
8,503
|
|
Warranties
|
43,094
|
30,753
|
|
Tax related liabilities(b)
|
6,041
|
7,163
|
|
Other liabilities(c)
|
17,696
|
18,637
|
|
Total other liabilities
|
$88,752
|
$92,191
|
| (a) | Employee related liabilities are largely comprised of long-term employee compensation programs. |
| (b) | Consists of reserves for uncertain tax positions. |
| (c) | Other liabilities primarily consist of holdbacks and earn-outs. |
| NOTE 16 | COMMITMENTS AND CONTINGENCIES |
|
(In thousands)
|
2018
|
2017
|
|
Balance at January 1
|
$80,317
|
101,492
|
|
Current year provisions
|
20,803
|
25,128
|
|
Utilizations and other
|
(34,894)
|
(33,384)
|
|
Balance at June 30
|
$66,226
|
93,236
|
| NOTE 17 | LEASES |
| NOTE 18 | PENSION AND POSTRETIREMENT BENEFIT PLANS |
| NOTE 19 | SEGMENT INFORMATION |
|
Total revenues
|
||
|
For the three months ended June 30
|
||
|
(In Thousands)
|
2018
|
2017
|
|
Equipment
|
$321,468
|
$413,753
|
|
Services
|
530,574
|
486,197
|
|
Digital
|
74,495
|
72,847
|
|
Eliminations
|
(9,533)
|
(7,539)
|
|
Total revenues
|
$917,004
|
$965,258
|
|
Total revenues
|
||
|
For the six months ended June 30
|
||
|
(In Thousands)
|
2018
|
2017
|
|
Equipment
|
$599,461
|
$961,882
|
|
Services
|
1,037,134
|
891,335
|
|
Digital
|
156,775
|
150,723
|
|
Eliminations
|
(19,482)
|
(23,355)
|
|
Total revenues
|
$1,773,888
|
$1,980,585
|
|
For the three months ended June 30
|
||
|
(In thousands)
|
2018
|
2017
|
|
Equipment
|
$(49,658)
|
$(9,506)
|
|
Services
|
164,160
|
151,860
|
|
Digital
|
1,159
|
4,978
|
|
Segment profit
|
$115,661
|
$147,332
|
|
Non-operating benefit costs
|
(2,504)
|
(8,532)
|
|
Restructuring costs
|
(2,582)
|
(19,636)
|
|
Interest expense and other finance charges
|
(5,055)
|
(9,141)
|
|
Provision for income taxes
|
(19,965)
|
(30,853)
|
|
Net earnings attributable to Parent
|
$85,555
|
$79,170
|
|
For the six months ended June 30
|
||
|
(In thousands)
|
2018
|
2017
|
|
Equipment
|
$(96,163)
|
$(12,992)
|
|
Services
|
322,440
|
252,945
|
|
Digital
|
849
|
6,611
|
|
Segment profit
|
$227,126
|
$246,564
|
|
Non-operating benefit costs
|
(5,155)
|
(11,262)
|
|
Restructuring costs
|
(4,416)
|
(69,677)
|
|
Interest expense and other finance charges
|
(9,381)
|
(15,353)
|
|
Provision for income taxes
|
(44,084)
|
(56,984)
|
|
Net earnings attributable to Parent
|
$164,090
|
$93,288
|
| NOTE 20 | SUBSEQUENT EVENTS |
|
Page
|
||
|
ARTICLE 1 Definitions
|
A-2
|
|
|
Section 1.01.
|
Definitions
|
A-2
|
|
Section 1.02.
|
Other Definitional and Interpretative Provisions
|
A-12
|
|
ARTICLE 2 The Merger
|
A-12
|
|
|
Section 2.01.
|
The Merger
|
A-12
|
|
Section 2.02.
|
Conversion of Shares
|
A-13
|
|
Section 2.03.
|
Surrender and Payment
|
A-13
|
|
Section 2.04.
|
Governance
|
A-15
|
|
ARTICLE 3 The Surviving Corporation
|
A-16
|
|
|
Section 3.01.
|
Certificate of Incorporation
|
A-16
|
|
Section 3.02.
|
Bylaws
|
A-16
|
|
Section 3.03.
|
Directors and Officers
|
A-16
|
|
ARTICLE 4 Representations and Warranties of the Company
|
A-16
|
|
|
Section 4.01.
|
Corporate Existence and Power
|
A-16
|
|
Section 4.02.
|
Corporate Authorization
|
A-16
|
|
Section 4.03.
|
Governmental Authorization
|
A-17
|
|
Section 4.04.
|
Non-contravention
|
A-17
|
|
Section 4.05.
|
Capitalization
|
A-18
|
|
Section 4.06.
|
Subsidiaries
|
A-18
|
|
Section 4.07.
|
Financial Statements
|
A-19
|
|
Section 4.08.
|
Registration Statement
|
A-20
|
|
Section 4.09.
|
Absence of Certain Changes
|
A-20
|
|
Section 4.10.
|
No Undisclosed Material Liabilities
|
A-21
|
|
Section 4.11.
|
Compliance with Laws
|
A-21
|
|
Section 4.12.
|
Permits
|
A-21
|
|
Section 4.13.
|
Litigation
|
A-21
|
|
Section 4.14.
|
Properties
|
A-21
|
|
Section 4.15.
|
Intellectual Property
|
A-22
|
|
Section 4.16.
|
Taxes
|
A-22
|
|
Section 4.17.
|
Employment and Employee Benefits Matters
|
A-23
|
|
Section 4.18.
|
Environmental Matters
|
A-25
|
|
Section 4.19.
|
Material Contracts
|
A-25
|
|
Section 4.20.
|
Sufficiency of Assets; Title
|
A-26
|
|
Section 4.21.
|
Finders’ Fees
|
A-26
|
|
Section 4.22.
|
SpinCo
|
A-26
|
|
Section 4.23.
|
Disclaimer of the Company and SpinCo
|
A-26
|
|
ARTICLE 5 Representations and Warranties of Parent
|
A-27
|
|
|
Section 5.01.
|
Corporate Existence and Power
|
A-27
|
|
Section 5.02.
|
Corporate Authorization
|
A-28
|
|
Section 5.03.
|
Governmental Authorization
|
A-28
|
|
Section 5.04.
|
Non-contravention
|
A-28
|
|
Section 5.05.
|
Capitalization
|
A-29
|
|
Section 5.06.
|
Subsidiaries
|
A-29
|
|
Section 5.07.
|
SEC Filings and the Sarbanes-Oxley Act
|
A-30
|
|
Section 5.08.
|
Financial Statements
|
A-31
|
|
Section 5.09.
|
Registration Statement
|
A-31
|
|
Section 5.10.
|
Absence of Certain Changes
|
A-32
|
|
Section 5.11.
|
No Undisclosed Material Liabilities
|
A-32
|
|
Section 5.12.
|
Compliance with Laws
|
A-32
|
|
Page
|
||
|
Section 5.13.
|
Permits
|
A-32
|
|
Section 5.14.
|
Litigation
|
A-32
|
|
Section 5.15.
|
Properties
|
A-33
|
|
Section 5.16.
|
Intellectual Property
|
A-33
|
|
Section 5.17.
|
Taxes
|
A-33
|
|
Section 5.18.
|
Employment and Employee Benefits Matters
|
A-34
|
|
Section 5.19.
|
Environmental Matters
|
A-35
|
|
Section 5.20.
|
Material Contracts
|
A-36
|
|
Section 5.21.
|
Financing
|
A-37
|
|
Section 5.22.
|
Finders’ Fees
|
A-38
|
|
Section 5.23.
|
Opinion of Financial Advisor
|
A-38
|
|
Section 5.24.
|
No Shareholders Rights Plan; No Antitakeover Law
|
A-38
|
|
Section 5.25.
|
Disclaimer of Parent and Merger Sub
|
A-38
|
|
ARTICLE 6 Covenants of the Company and SpinCo
|
A-39
|
|
|
Section 6.01.
|
Conduct of SpinCo
|
A-39
|
|
Section 6.02.
|
Interim Taxes
|
A-40
|
|
Section 6.03.
|
Obligations of SpinCo
|
A-40
|
|
Section 6.04.
|
Access to Information
|
A-40
|
|
Section 6.05.
|
Required Financial Statements
|
A-41
|
|
Section 6.06.
|
No Solicitation of Competing SpinCo Transaction
|
A-41
|
|
ARTICLE 7 Covenants of Parent
|
A-42
|
|
|
Section 7.01.
|
Conduct of Parent
|
A-42
|
|
Section 7.02.
|
Interim Taxes
|
A-43
|
|
Section 7.03.
|
Parent Stockholder Meeting
|
A-44
|
|
Section 7.04.
|
No Solicitation; Other Offers
|
A-44
|
|
Section 7.05.
|
Obligations of Merger Sub
|
A-47
|
|
Section 7.06.
|
Director and Officer Liability
|
A-47
|
|
Section 7.07.
|
Stock Exchange Listing
|
A-47
|
|
Section 7.08.
|
Employee Matters
|
A-47
|
|
Section 7.09.
|
Access to Information
|
A-47
|
|
Section 7.10.
|
Takeover Statutes
|
A-48
|
|
Section 7.11.
|
Defense of Litigation
|
A-48
|
|
Section 7.12.
|
Release from Credit Support Instruments
|
A-48
|
|
ARTICLE 8 Covenants of Parent, the Company and SpinCo
|
A-49
|
|
|
Section 8.01.
|
Reasonable Best Efforts
|
A-49
|
|
Section 8.02.
|
Registration Statements; Proxy Statement; Schedule TO
|
A-50
|
|
Section 8.03.
|
Public Announcements
|
A-51
|
|
Section 8.04.
|
Further Assurances
|
A-51
|
|
Section 8.05.
|
Notices of Certain Events
|
A-52
|
|
Section 8.06.
|
Confidentiality
|
A-52
|
|
Section 8.07.
|
Tax Matters
|
A-52
|
|
Section 8.08.
|
Section 16 Matters
|
A-54
|
|
Section 8.09.
|
Control of other Party’s Business
|
A-54
|
|
Section 8.10.
|
Further Actions
|
A-54
|
|
Section 8.11.
|
Financing
|
A-55
|
|
ARTICLE 9 Conditions to the Merger
|
A-59
|
|
|
Section 9.01.
|
Conditions to the Obligations of Each Party
|
A-59
|
|
Section 9.02.
|
Conditions to the Obligations of Parent and Merger Sub
|
A-60
|
|
Section 9.03.
|
Conditions to the Obligations of the Company and SpinCo
|
A-60
|
|
Page
|
||
|
ARTICLE 10 Termination
|
A-61
|
|
|
Section 10.01.
|
Termination
|
A-61
|
|
Section 10.02.
|
Effect of Termination
|
A-62
|
|
Section 10.03.
|
Fees and Expenses
|
A-63
|
|
ARTICLE 11 Miscellaneous
|
A-64
|
|
|
Section 11.01.
|
Notices
|
A-64
|
|
Section 11.02.
|
Survival of Representations, Warranties and Covenants
|
A-64
|
|
Section 11.03.
|
Amendments and Waivers
|
A-65
|
|
Section 11.04.
|
Disclosure Schedule
|
A-65
|
|
Section 11.05.
|
Binding Effect; Benefit; Assignment
|
A-65
|
|
Section 11.06.
|
Governing Law
|
A-65
|
|
Section 11.07.
|
Jurisdiction
|
A-65
|
|
Section 11.08.
|
WAIVER OF JURY TRIAL
|
A-66
|
|
Section 11.09.
|
Counterparts; Effectiveness
|
A-66
|
|
Section 11.10.
|
Entire Agreement
|
A-66
|
|
Section 11.11.
|
Severability
|
A-66
|
|
Section 11.12.
|
Specific Performance
|
A-66
|
|
Section 11.13.
|
Limited Liability
|
A-67
|
|
Section 11.14.
|
No Recourse to Lender Related Parties
|
A-67
|
| (b) | Each of the following terms is defined in the Section set forth opposite such term: |
|
Term
|
Section
|
|
4.17
|
|
|
Adverse Recommendation Change
|
7.04
|
|
Agreement
|
Preamble
|
|
Alternative Commitment Letter
|
8.11
|
|
Alternative Financing
|
8.11
|
|
Alternative Financing Agreements
|
8.11
|
|
Audited Financial Statements
|
6.05
|
|
Bankruptcy Exceptions
|
4.02
|
|
Clean-Up Spin-Off
|
Recitals
|
|
Closing
|
2.01
|
|
Company
|
Preamble
|
|
Company Board
|
Recitals
|
|
Company Common Stock
|
Recitals
|
|
Company Merger Tax Opinion
|
8.07
|
|
Company RMT Tax Opinions
|
8.07
|
|
Company Separation Tax Opinion
|
8.07
|
|
Company Separation Tax Opinion Condition
|
9.03
|
|
Commerce
|
4.11
|
|
Committee
|
2.04
|
|
Corrective Changes
|
8.10
|
|
Distribution
|
Recitals
|
|
Term
|
Section
|
|
Distribution Share Maximum
|
Recitals
|
|
Distribution Share Minimum
|
Recitals
|
|
Effective Time
|
2.01
|
|
End Date
|
10.01
|
|
Exchange Agent
|
2.03
|
|
Exchange Fund
|
2.03
|
|
Exchange Offer
|
Recitals
|
|
Exchange Offer Number
|
Recitals
|
|
Fee Letters
|
5.21
|
|
Financing
|
5.21
|
|
Financing Agreements
|
8.11
|
|
Financing Obligations
|
5.21
|
|
Indemnified Person
|
7.06
|
|
Initial Audited Financial Statements
|
6.05
|
|
Initial New Board Designees
|
2.04
|
|
Initial Interim Financial Statements
|
6.05
|
|
Interim Financial Statements
|
6.05
|
|
Interim Period
|
6.05
|
|
Intervening Event
|
7.04
|
|
Lease
|
4.14
|
|
Lender
|
5.21
|
|
Lender Provisions
|
11.03
|
|
Merger
|
Recitals
|
|
Merger Consideration
|
2.02
|
|
Merger Sub
|
Preamble
|
|
New Board Designees
|
2.04
|
|
OFAC
|
4.11
|
|
One-Step Spin-Off
|
Recitals
|
|
Parent
|
Preamble
|
|
Parent 2019 Stockholders Meeting
|
2.04
|
|
Parent Proxy Mailing Date
|
2.04
|
|
Parent Board
|
Recitals
|
|
Parent Board Recommendation
|
5.02
|
|
Parent Commitment Letter
|
5.21
|
|
Parent Financing
|
8.11
|
|
Parent Material Contract
|
5.20
|
|
Parent Merger Tax Opinion
|
8.07
|
|
Parent Permit
|
5.13
|
|
Parent Preferred Stock
|
5.05
|
|
Parent Registration Statement
|
8.02
|
|
Parent SEC Documents
|
5.07
|
|
Parent Securities
|
5.05
|
|
Parent Stockholder Meeting
|
7.03
|
|
Parent Subsidiary Securities
|
5.06
|
|
Proxy Statement
|
8.02
|
|
Registration Statements
|
8.02
|
|
Representatives
|
6.06
|
|
Restructuring Commencement Date
|
8.07
|
|
Retained Shares
|
Recitals
|
|
Schedule TO
|
8.02
|
|
Term
|
Section
|
|
Shares
|
2.02
|
|
SpinCo
|
Preamble
|
|
SpinCo Board
|
Recitals
|
|
SpinCo Common Stock
|
Recitals
|
|
SpinCo Registration Statement
|
8.02
|
|
SpinCo Securities
|
4.05
|
|
Superior Proposal
|
7.04
|
|
Surviving Corporation
|
2.01
|
|
Termination Fee
|
10.03
|
|
Tiger Material Contract
|
4.19
|
|
Tiger Permit
|
4.12
|
|
Tiger Subsidiary Securities
|
4.06
|
|
Tiger Unaudited Financial Statements
|
4.07
|
| (b) | Subject to the provisions of Article 9, the closing of the Merger (the ‘‘Closing’’) shall take place in New York City at the offices of Jones Day, 250 Vesey Street, New York, New York, 10281 as soon as |
| (c) | At the Closing, SpinCo and Merger Sub shall file a certificate of merger with the Delaware Secretary of State and make all other filings or recordings required by Delaware Law in connection with the Merger. The Merger shall become effective at such time (the ‘‘Effective Time’’) as the certificate of merger is duly filed with the Delaware Secretary of State (or at such later time as the parties may agree and as is specified in the certificate of merger). |
| (d) | From and after the Effective Time, the Surviving Corporation shall possess all the rights, powers, privileges and franchises and be subject to all of the obligations, liabilities, restrictions and disabilities of SpinCo and Merger Sub, all as provided under Delaware Law. |
| (e) | At the Closing, each of the Company and Parent shall deliver to the other a duly executed counterpart to the Shareholders Agreement. |
| (b) | At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, SpinCo or the holders of SpinCo Common Stock, each share of SpinCo Common Stock held by SpinCo as treasury stock or owned by Parent immediately prior to the Effective Time shall be canceled, and no payment shall be made with respect thereto. |
| (c) | At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, SpinCo or the holders of Merger Sub, each share of common stock of Merger Sub outstanding immediately prior to the Effective Time shall be converted into and become one share of common stock of the Surviving Corporation with the same rights, powers and privileges as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation. |
| (b) | As promptly as practicable after the Effective Time, Parent shall cause the Exchange Agent to distribute the shares of Parent Common Stock into which the Shares have been converted pursuant to the Merger, which, in the case of Shares distributed in the Distribution, shall be distributed on the same basis as Shares were distributed in the Distribution and to the Persons who received Shares in the Distribution. Each holder of Shares shall be entitled to receive in respect of the Shares held by such Person a book-entry authorization representing the number of whole shares of Parent Common Stock that such holder has the right to receive pursuant to this Section 2.03(b) (and cash in lieu of fractional shares of Parent Common Stock, as contemplated by Section 2.03(e), and any dividends or distributions and other amounts pursuant to Section 2.03(c)). The Exchange Agent shall not be entitled to vote or exercise any rights of ownership with respect to Parent Common Stock held by it from time to time hereunder, except as contemplated by Section 2.03(c). |
| (c) | Subject to the following sentence, no dividends or other distributions declared after the Effective Time with respect to Parent Common Stock shall be paid with respect to any shares of Parent Common Stock that are not able to be distributed by the Exchange Agent promptly after the Effective Time, whether due to a legal impediment to such distribution or otherwise. Subject to the effect of abandoned property, escheat, Tax or other Applicable Laws, following the distribution of any such previously undistributed shares of Parent Common Stock, there shall be paid to the record holder of such shares of Parent Common Stock, without interest, (i) at the time of the distribution, the amount of cash payable in lieu of a fractional share of Parent Common Stock to which such holder is entitled pursuant to Section 2.03(e) and the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of Parent Common Stock; and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to the distribution of such whole shares of Parent Common Stock and a payment date subsequent to the distribution of such whole shares of Parent Common Stock. |
| (d) | All shares of Parent Common Stock issued upon the exchange of SpinCo Common Stock in accordance with the terms of this Section 2.03 (including any cash paid pursuant to Section 2.03(c) or Section 2.03(e)) shall be deemed to have been issued or paid, as the case may be, in full satisfaction of all rights pertaining to such shares of SpinCo Common Stock. |
| (e) | No certificates or scrip representing fractional shares of Parent Common Stock or book-entry credit of the same shall be issued on conversion of SpinCo Common Stock, and such fractional share interests will not entitle the owner thereof to vote, or to any other rights of a stockholder of Parent. All fractional shares of Parent Common Stock that a holder of shares of SpinCo Common Stock would otherwise be entitled to receive as a result of the Merger shall be aggregated by the Exchange Agent. The Exchange Agent shall cause the whole shares obtained thereby to be sold on behalf of such holders of shares of SpinCo Common Stock that would otherwise be entitled to receive such fractional shares of Parent Common Stock pursuant to the Merger, in the open market or otherwise, in each case at then-prevailing market prices, and in no case later than five Business Days after the time of the Distribution. The Exchange Agent shall make available the net proceeds thereof, subject to the deduction of the amount of any withholding Taxes as contemplated in Section 2.03(i) and brokerage charges, commissions and conveyance and similar Taxes, on a pro rata basis, without interest, as soon as practicable to the holders of SpinCo Common Stock that would otherwise be entitled to receive such fractional shares of Parent Common Stock pursuant to the Merger. |
| (f) | The Exchange Ratio shall be adjusted to reflect appropriately the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Parent Common Stock or SpinCo Common Stock), extraordinary cash dividends, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Parent Common Stock or SpinCo Common Stock (other than (i) issuance of stock by SpinCo in connection with the Separation or other transactions contemplated by this Agreement or the Separation Agreement and (ii) any extraordinary cash dividends with respect to SpinCo Common Stock) with a |
| (g) | Any portion of the Exchange Fund (including proceeds of any investment thereof) that remains undistributed to the former holders of Shares on the date that is twelve months after the Effective Time shall be delivered to Parent, upon demand, and any former holders of Shares who have not theretofore received shares of Parent Common Stock in accordance with this Section 2.03 shall thereafter look only to Parent for the Merger Consideration to which they are entitled pursuant to Section 2.02(a), any cash in lieu of fractional shares of Parent Common Stock to which they are entitled pursuant to Section 2.03(e) and any dividends or other distributions with respect to the Parent Common Stock to which they are entitled pursuant to Section 2.03(c) (subject to any abandoned property, escheat or similar Applicable Law). |
| (h) | None of Parent, the Company, SpinCo, Merger Sub, the Surviving Corporation or the Exchange Agent shall be liable to any Person for any Merger Consideration from the Exchange Fund (or dividends or distributions with respect to Parent Common Stock) or other cash delivered to a public official pursuant to any abandoned property, escheat or similar Applicable Law. Any portion of the Exchange Fund remaining unclaimed by holders of Shares as of a date which is immediately prior to such time as such amounts would otherwise escheat to or become property of any Governmental Authority shall, to the extent permitted by Applicable Law, become the property of Parent free and clear of any claims or interest of any Person previously entitled thereto. |
| (i) | Notwithstanding any provision contained herein to the contrary, each of the Exchange Agent, the Surviving Corporation, Parent and Merger Sub shall be entitled to deduct and withhold from the amounts otherwise payable to any Person pursuant to this Agreement such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of Tax law. If the Exchange Agent, the Surviving Corporation, Parent or Merger Sub, as the case may be, so withholds amounts, such amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of SpinCo Common Stock in respect of which the Exchange Agent, the Surviving Corporation, Parent or Merger Sub, as the case may be, made such deduction and withholding. |
| (j) | From and after the Effective Time, the stock transfer books of SpinCo shall be closed, and there shall be no further registration of transfers of Shares thereafter on the records of SpinCo. |
| (b) | Each of the New Board Designees shall qualify as an ‘‘independent director’’ under the rules of the New York Stock Exchange and shall be reasonably acceptable to the Nomination and Corporate Governance Committee of the Parent Board (the ‘‘Committee’’). In selecting the New Board Designees, the Company shall consider in good faith the Committee’s director criteria for election of independent directors to the Parent Board. If the Committee determines, after consultation in good faith with the Company, that any New Board Designee is not reasonably acceptable, the Company may propose another individual as a New Board Designee, at which point the review and consultation process will be repeated until three New Board Designees have satisfied the requirements above. |
| (c) | At the direction of the Company, (x) one New Board Designee selected by the Company (the ‘‘Initial New Board Designee’’) shall be assigned to the class of directors that is up for reelection at the first annual meeting of Parent’s stockholders that occurs after the Effective Time, (y) one New Board Designee selected by the Company shall be assigned to the class of directors that is up for reelection at the second annual meeting of Parent’s stockholders that occurs after the Effective Time and (z) one New Board Designee selected by the Company shall be assigned to the class of directors that is up for reelection at the third annual meeting of Parent’s stockholders that occurs after the Effective Time. |
| (d) | If the Effective Time occurs: |
| (i) | after the date that is six months prior to the date of the 2019 annual meeting of Parent’s stockholders (the ‘‘Parent 2019 Stockholders Meeting’’) and prior to the date on which Parent commences mailing its proxy statement for the Parent 2019 Stockholders Meeting (the ‘‘Parent 2019 Proxy Mailing Date’’), then Parent shall, and shall cause the Parent Board to, take all necessary action to (i) nominate the Initial New Board Designee for election to the Parent Board at the Parent 2019 Stockholders Meeting, (ii) recommend that Parent’s stockholders vote in favor of the election of the Initial New Board Designee to the Parent Board at the Parent 2019 Stockholder Meeting and (iii) use no less rigorous efforts to support the election of the Initial New Board Designee to the Parent Board at the Parent 2019 Stockholder Meeting than the efforts used to support the election of each other nominee of the Parent Board for election to the Parent Board at the Parent 2019 Stockholder Meeting; or |
| (ii) | after the Parent 2019 Proxy Mailing Date and prior to the Parent 2019 Stockholder Meeting, then Parent shall, and shall cause the Parent Board to, take all necessary action to cause the Initial New Board Designee to be re-appointed to the Parent Board as of immediately following the Parent 2019 Stockholder Meeting (and to be re-assigned to the class of directors that was elected at the Parent 2019 Stockholder Meeting). |
| (e) | Notwithstanding anything to the contrary in this Agreement or any other Transaction Agreement, from and after the Effective Time, the rights set forth in Section 2.04(d) shall inure solely to the benefit of, and shall solely be enforceable by, the Initial New Board Designee, and shall neither inure to the benefit or, nor be enforceable by, the Company or any other Person. |
| (b) | SpinCo is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect. |
| (b) | To the extent it will be a party thereto, each of the Company, SpinCo and their respective Subsidiaries has the necessary corporate power and authority to enter into the Ancillary Agreements, to carry out its obligations thereunder and to consummate the transactions contemplated thereby. The execution and delivery by each of the Company, SpinCo and their respective Subsidiaries of the Ancillary Agreements, in each case to the extent it will be a party thereto, the performance by each of the Company, SpinCo and their respective Subsidiaries, as applicable, of their respective obligations thereunder and the consummation by each of the Company, SpinCo and their respective Subsidiaries of the transactions contemplated thereby will be, duly authorized by all requisite corporate or other entity action on the part of each of the Company, SpinCo and their respective Subsidiaries, as applicable. Each Ancillary Agreement will be duly executed and delivered by each of the Company, SpinCo and their respective Subsidiaries party thereto, as applicable, and (assuming due authorization, execution and delivery by the other parties thereto) each Ancillary Agreement will constitute, a legal, valid and binding obligation of each of the Company, SpinCo and their respective Subsidiaries party thereto or contemplated to be party thereto, as applicable, enforceable against each of the Company, SpinCo and their respective Subsidiaries, as applicable, in accordance with its terms (subject to the Bankruptcy Exceptions). |
| (c) | No ‘‘fair price,’’ ‘‘moratorium,’’ ‘‘control share acquisition,’’ ‘‘business combination’’ or other similar antitakeover Applicable Law applicable to the Company or SpinCo enacted in any jurisdiction applies to this Agreement, the Separation Agreement, the Merger or the other transactions contemplated hereby. |
| (d) | The affirmative vote of the holders of a majority of the voting power of the outstanding shares of SpinCo Common Stock is the only vote of the holders of shares of SpinCo Common Stock necessary to adopt this Agreement or consummate the Merger or the other transactions contemplated hereby. The approval of holders of any class or series of the Company capital stock is not required to adopt this Agreement or the Separation Agreement or to consummate the Merger or the other transactions contemplated hereby. |
| (b) | There are no outstanding bonds, debentures, notes or other indebtedness of SpinCo having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of SpinCo may vote. Except as set forth in this Section 4.05, there are no issued, reserved for issuance or outstanding (i) shares of capital stock or other voting securities of or ownership interests in SpinCo, (ii) securities of SpinCo convertible into or exchangeable for shares of capital stock or other voting securities of or ownership interests in SpinCo, (iii) warrants, calls, options or other rights to acquire from SpinCo, or other obligations of SpinCo to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of SpinCo, or (iv) restricted shares, stock appreciation rights, performance units, contingent value rights, ‘‘phantom’’ stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock of or voting securities of SpinCo (the items in clauses (i) through (iv) being referred to collectively as the ‘‘SpinCo Securities’’). There are no outstanding obligations of SpinCo or any of its Subsidiaries to repurchase, redeem or otherwise acquire any SpinCo Securities. |
| (b) | As of the Effective Time, all of the outstanding capital stock of or other voting securities of, or ownership interests in, each Transferred Subsidiary, will be owned by SpinCo (or, in the case of the Direct Sale Transferred Subsidiaries, Direct Sale Purchaser), directly or indirectly, free and clear of all Liens. Other than such capital stock of or other voting securities of, or ownership interests in, each Transferred Subsidiary, owned by SpinCo (or, in the case of the Direct Sale Transferred Subsidiaries, Direct Sale Purchaser), directly or indirectly, as of the Effective Time, there will be no issued, reserved for issuance or outstanding (i) securities of SpinCo or any of the Transferred Subsidiaries convertible into, or exchangeable for, shares of capital stock or other voting securities of, or ownership interests in, any Transferred Subsidiary, (ii) warrants, calls, options or other rights to acquire from SpinCo or any of the Transferred Subsidiaries, or other obligations of SpinCo or any of the Transferred Subsidiaries to issue, any capital stock or other voting securities of, or ownership interests in, or any securities convertible into, or exchangeable for, any capital stock or other voting securities of, or ownership interests in, any Transferred Subsidiary, or (iii) restricted shares, stock appreciation rights, performance |
| (c) | Section 4.06(c) of the SpinCo Disclosure Schedule sets forth a complete and correct list of all Tiger JVs with revenues in excess of $25 million in 2017, including, in each case, its name, jurisdiction and form of organization and the percentage of its outstanding equity or profits interests that are, or at the Effective Time will be, owned by SpinCo, Direct Sale Purchaser or one of the Transferred Subsidiaries. To the knowledge of SpinCo as of the date of this Agreement, subject to the terms and conditions of such respective certificates of incorporation, bylaws, limited liability company agreements or similar organizational documents made available to Parent prior to the date of this Agreement, there are no outstanding options, warrants, convertible debt, other convertible instruments or other commitments obligating any Tiger JV to issue, grant, extend or enter into any such option, warrant, convertible debt, other convertible instrument or other right, agreement, arrangement or commitment. |
| (b) | When delivered pursuant to Section 6.05, the Audited Financial Statements and the Interim Financial Statements, as applicable, shall: (i) have been prepared in accordance with GAAP, consistently applied, (ii) except as set forth on Section 6.05 of the SpinCo Disclosure Schedule, present fairly in all material respects the financial position, results of operations and cash flows of the Tiger Business as at the dates and for the periods presented (subject to year-end adjustments, in the case of the Interim Financial Statements) (it being understood, however, that the Tiger Business has not been operating historically as a separate entity and, therefore, the Audited Financial Statements and the Interim Financial Statements will reflect certain adjustments necessary to be presented on a carve-out basis in accordance with GAAP and the rules and regulations of the SEC), and (iii) have been prepared in conformity in all material respects to the rules and regulations of the SEC applicable to the annual and quarterly, as applicable, financial statements of the Tiger Business required to be included in the Registration Statements, the Proxy Statement and, if applicable, the Schedule TO. |
| (c) | As of December 31, 2017, the amount of Factored Customer Receivables (as such term is defined in the Separation Agreement, provided that such calculation is made as of December 31, 2017 instead of the Distribution Effective Time) was $150,170,214, and the amount of Gross Factored Receivables (as such term is defined in the Separation Agreement, provided that such calculation is made as of December 31, 2017 instead of the Distribution Effective Time) was $237,051,904. |
| (d) | The Company has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the 1934 Act) with respect to the Tiger Business. Such disclosure controls and procedures are designed to ensure that material information relating to the Tiger Business is made known to the Company’s principal executive officer and its principal financial officer by others within the Tiger |
| (e) | Since January 1, 2015, with respect to the Tiger Business, the Company and its Subsidiaries (including SpinCo and the Transferred Subsidiaries) have established and maintained a system of internal controls over financial reporting (as defined in Rule 13a-15 under the 1934 Act) sufficient to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Company financial statements for external purposes in accordance with GAAP. The Company has disclosed, based on its most recent evaluation of internal controls prior to the date hereof, to the Company’s auditors and audit committee (i) any significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information with respect to the Tiger Business and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in internal controls over financial reporting with respect to the Tiger Business. The Company has made available to Parent a summary of any such disclosure made by management to the Company’s auditors and audit committee since January 1, 2015. For the avoidance of doubt, such internal controls over financial reporting are maintained (and determinations of significant deficiencies, material weaknesses and employees who have a significant role in internal controls are made) on a Company-wide basis and not separately with respect to the Tiger Business. |
| (f) | Each of the principal executive officer and principal financial officer of the Company (or each former principal executive officer and principal financial officer of the Company, as applicable) have made all certifications required by Rule 13a-14 and 15d-14 under the 1934 Act and Sections 302 and 906 of the Sarbanes-Oxley Act and any related rules and regulations promulgated by the SEC and the New York Stock Exchange, and the statements contained in any such certifications are complete and correct. |
| (b) | From December 31, 2017 until the date hereof, there has not been any action taken by the Company or any of its Subsidiaries that, if taken during the period from the date of this Agreement through the Effective Time without Parent’s consent, would constitute a breach of clause (a), (c), (i), (j) or (m) (as it relates to any of the foregoing) of Section 6.01. |
| (b) | The Company and its Subsidiaries are conducting, and since January 1, 2015 have conducted, the Tiger Business in compliance with (i) the Foreign Corrupt Practices Act of 1977, (ii) the United Kingdom Bribery Act of 2010, and (iii) all Applicable Laws to which the Company or any of its Subsidiaries is subject with respect to the Tiger Business relating to anti-money laundering compliance, in each case except for failures to comply or violations that would not reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect. |
| (c) | The Company, its Subsidiaries and, to the knowledge of SpinCo as of the date of this Agreement, the Tiger JVs and any agents or other Persons acting for, on behalf of or at the direction of the Company, its Subsidiaries or, to the knowledge of SpinCo as of the date of this Agreement, the Tiger JVs, in each case with respect to the Tiger Business: (i) are not, and since January 1, 2015 have not been, designated on, and are not owned or controlled by any party that is or has been designated on, any list of restricted parties maintained by any U.S. Governmental Authority, including the U.S. Department of Treasury Office of Foreign Assets Control (‘‘OFAC’’) Specially Designated Nationals and Blocked Persons List, OFAC’s list of Foreign Sanctions Evaders, OFAC’s Sectoral Sanctions Identifications List, U.S. Department of Commerce’s (‘‘Commerce’’) Denied Person’s List, the Commerce Entity List and the U.S. Department of State Debarred List and (ii) since January 1, 2015, have not participated in any transaction involving such a designated Person, or any country subject to an embargo or substantial restrictions on trade under the U.S. sanctions administered by OFAC, in each case except as would not reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect. |
| (b) | Except as would not reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect, (i) each lease, sublease or license (each, a ‘‘Lease’’) constituting a Tiger Asset under which the Company or any of its Subsidiaries leases, subleases or licenses any real property is valid and in full force and effect and (ii) neither the Company nor any of its Subsidiaries, nor, to SpinCo’s knowledge, any other party to any such Lease, has violated any provision of, or taken or failed to take any act which, with or without notice, lapse of time, or both, would constitute a default under the provisions of any such Lease. |
| (b) | Except as would not reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect, (i) as of the Closing, SpinCo, one of the Transferred Subsidiaries or Direct Sale Purchaser will own all of the Tiger Intellectual Property Rights (in each case, free and clear of any Liens (other than Permitted Liens and Liens created by Parent or Direct Sale Purchaser)), (ii) to the knowledge of SpinCo, (A) the operation of the Tiger Business as currently conducted does not infringe or misappropriate any Intellectual Property Rights of any Person and (B) no Person is infringing or misappropriating the Tiger Intellectual Property Rights, and (iii) there is no Action pending against the Company or any of its Subsidiaries relating to the Tiger Business (A) alleging that any services provided, processes used or products manufactured or sold by the Tiger Business infringe or misappropriate any Intellectual Property Rights of any Person or (B) challenging the validity or enforceability of any Tiger Intellectual Property Rights. |
| (c) | Except as would not reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect, to the knowledge of SpinCo, there has been no unauthorized access or malfunction of any Tiger IT Assets within the past three years that has resulted in the unauthorized access or loss of any data of the Tiger Business. |
| (d) | Except as would not reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect, the Company and its Subsidiaries (with respect to the Tiger Business) use commercially reasonable efforts to maintain the confidentiality of their Trade Secrets. |
| (a) | All Tax Returns required by Applicable Law to be filed with any Taxing authority by, or on behalf of, SpinCo or any of the Transferred Subsidiaries or otherwise with respect to the Tiger Business or Tiger Assets have been timely filed when due in accordance with all Applicable Law, and all such Tax Returns are, or shall be at the time of filing, true and complete. |
| (b) | The Company and its Subsidiaries, including SpinCo and each of the Transferred Subsidiaries, has paid (or has had paid on its behalf) or has withheld and remitted to the appropriate Taxing authority all Taxes due and payable by SpinCo and each Transferred Subsidiary or otherwise with respect to the Tiger Business or Tiger Assets, or, where payment is not yet due, has established (or has had established on its behalf and for its sole benefit and recourse) in accordance with GAAP an adequate accrual for all Taxes through the end of the last period for which SpinCo and the Transferred Subsidiaries ordinarily record items on their respective books. |
| (c) | Neither SpinCo nor any of the Transferred Subsidiaries has granted any extension or waiver of the statute of limitations period applicable to any Tax Return, which period (after giving effect to such extension or waiver) has not yet expired, and no request for any such extension or waiver is currently pending. |
| (d) | There is no Action now pending or, to SpinCo’s knowledge, threatened against or with respect to SpinCo or the Transferred Subsidiaries or the Tiger Business or the Tiger Assets in respect of any Tax |
| (e) | Except as set forth in the Step Plan or otherwise effected as part of the SpinCo Transfer and the Distribution, during the five-year period ending on the Closing Date, neither SpinCo nor any of the Transferred Subsidiaries was (or will be) a distributing corporation or a controlled corporation in a transaction intended to be governed by Section 355 of the Code. |
| (f) | None of the Company, SpinCo and the Transferred Subsidiaries has participated in a ‘‘listed transaction’’ within the meaning of Treasury Regulations section 1.6011-4. |
| (g) | None of the Company, SpinCo or their respective Subsidiaries has taken or agreed to take any action that would (and none of them is aware of any fact, event, agreement, plan or other circumstance that would) prevent the Tax-Free Status of the External Transactions. As of the date hereof, the Company and SpinCo do not know of any reason (i) why they would not be able to deliver the Tax Representation Letters at the applicable times set forth in Section 8.07(c), or (ii) why the Company would not be able to obtain the opinions contemplated by Section 9.03(b). |
| (h) | There are no Liens for Taxes on the Tiger Assets or the assets or properties of SpinCo or the Transferred Subsidiaries or otherwise with respect to the Tiger Business, other than Liens for Taxes not yet due and payable or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been established in accordance with GAAP. |
| (i) | Neither SpinCo nor any of the Transferred Subsidiaries is a party to or bound by any Tax-allocation, Tax-sharing or Tax-indemnification agreement or other similar contract or arrangement, other than (i) as of the Closing Date, the Tax Matters Agreement, (ii) any such contract or arrangement pursuant to customary commercial agreements or arrangements entered into in the ordinary course of business and not primarily related to Taxes, or (iii) any such contract or arrangement that terminates at the Closing. |
| (j) | The representations and warranties contained in this Section 4.16 (and, to the extent relating to Taxes, Section 4.17) constitute the sole and exclusive representations and warranties by the Company herein with respect to Tax matters. |
| (b) | Neither SpinCo nor any of its ERISA Affiliates sponsors, maintains, contributes to or has an obligation to contribute to, or has in the past six years sponsored, maintained, contributed to or had an obligation to contribute to, any employee benefit plan subject to Title IV of ERISA, including any ‘‘multiemployer plan’’ as defined in Section 3(37) of ERISA, except as would not reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect. |
| (c) | Except would not reasonably be expected to have a Tiger Material Adverse Effect, each Tiger Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination or opinion letter from the IRS or has applied to the IRS for such a letter within the applicable remedial amendment period or such period has not expired, and nothing has occurred since the date of any such determination or opinion letter that could reasonably be expected to give the IRS |
| (d) | Each Tiger Benefit Plan has been maintained, operated and administered in compliance with its terms and all Applicable Law, including ERISA and the Code, except for failures to comply or violations that would not reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect. There have been no prohibited transactions or breaches of any of the duties imposed on ‘‘fiduciaries’’ (within the meaning of Section 3(21) of ERISA) by ERISA with respect to any Tiger Benefit Plan that would reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect. No Action (other than routine claims for benefits) is pending against or involves or, to the knowledge of SpinCo, is threatened against or threatened to involve, any Tiger Benefit Plan before any Governmental Authority, nor, to the knowledge of SpinCo, is there any basis for any such Action, in any case that would reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect. |
| (e) | No Tiger Benefit Plan provides any post-retirement or post-termination of service medical, dental or life insurance benefits to any current or former service provider (other than coverage mandated by Applicable Law), except as would not reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect. |
| (f) | Except as would not reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect, all contributions, premiums and payments that are due have been made for each Tiger Benefit Plan within the time periods prescribed by the terms of such plan and Applicable Law. |
| (g) | Except as set forth in Section 4.17(g) of the SpinCo Disclosure Schedule, neither the execution of this Agreement or the Separation Agreement nor the consummation of the transactions contemplated hereby (either alone or together with any other event) will (i) entitle any Tiger Service Provider or any directors or consultants of SpinCo or any of the Transferred Subsidiaries (or any of their dependents) to any material payment or benefit or accelerate the time of payment or vesting of any material compensation or benefits, in either case under any Tiger Benefit Plan or (ii) result in the payment of any amount under a Tiger Benefit Plan that would not be deductible by SpinCo or a Transferred Subsidiary as a result of Section 280G of the Code. Neither the Company nor any of its Subsidiaries has any obligation to gross-up, indemnify or otherwise reimburse any Tiger Service Provider for any material Tax incurred by such Tiger Service Provider under Section 409A or 4999 of the Code. |
| (h) | The Company and its Subsidiaries are conducting, and since January 1, 2015 have conducted, the Tiger Business in compliance with all Applicable Laws relating to labor and employment, including those relating to labor management relations, wages, hours, overtime, discrimination, sexual harassment, civil rights, affirmative action, work authorization, immigration, safety and health and continuation coverage under group health plans, except for failures to comply or violations that would not reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect. |
| (i) | Except as set forth in Section 4.17(i) of the SpinCo Disclosure Schedule, there is no formal union organizational campaigns or petitions or other material unionization activities seeking recognition of a bargaining unit in the Tiger Business, and no material unfair labor practice charges or other complaints or union representation questions are before the National Labor Relations Board or other labor board or Governmental Authority that, in either case, would reasonably be expected to have a Tiger Material Adverse Effect. There is no material labor strike, slowdown or stoppage pending or, to SpinCo’s knowledge, threatened against or affecting the Tiger Business. |
| (j) | Section 4.17(j) of the SpinCo Disclosure Schedule, sets forth a true and correct list of any and all applicable collective bargaining, works council and other similar employee representative agreements (including agreements governed by Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185) with any labor organization representing employees of the Tiger Business. |
| (k) | Since January 1, 2015, neither the Company nor any of its Subsidiaries has implemented any plant closing or mass layoff, in connection with the Tiger Business, that required notice under any Applicable Law. |
| (l) | Prior to the date hereof, the Company has provided to Parent a true and complete Employee Census (as defined in the Employee Matters Agreement), as of the date provided. |
| (m) | None of the Transferred Subsidiaries is (i) the employer of any employee covered by any U.S. CBA or (ii) the owner of any facility, real property or equipment at any facility that employs employees that are covered by any U.S. CBA. |
| (i) | no written notice, order, complaint, judgment, decree, decision, fine or penalty arising under any Environmental Laws, that has not been fully resolved, has been received by the Company or any of its Subsidiaries with respect to the Tiger Business, and there are no Actions (or, to the knowledge of SpinCo, governmental examinations or investigations not otherwise constituting an Action) pending or, to SpinCo’s knowledge, threatened which allege a violation of, or liability or obligation under, any Environmental Laws by or of the Company or any of its Subsidiaries relating to the Tiger Business; |
| (ii) | the Company and its Subsidiaries possess all Tiger Permits required under applicable Environmental Laws and are, and since January 1, 2015 have been, in compliance with the terms of such Tiger Permits; |
| (iii) | the operations of the Company and each of its Subsidiaries relating to the Tiger Business are, and since January 1, 2015 have been, in compliance with applicable Environmental Laws; and |
| (iv) | neither the Company nor any of its Subsidiaries is conducting, or has received written notice asserting that it is or may be liable or obligated under applicable Environmental Laws or under the terms of a third-party agreement to conduct or pay for, any investigation, cleanup, remediation or similar activities with respect to the actual or alleged Release or threatened Release of any Hazardous Materials related to the Tiger Business. |
| (b) | Except as set forth in this Section 4.18, no representations or warranties are being made by the Company or SpinCo with respect to matters arising under or relating to Environmental Laws. |
| (i) | any Leases pertaining to any Tiger Material Real Property; |
| (ii) | any contract for the purchase of products or for the receipt of services, which (A) involved consideration or payments by the Company or any of its Subsidiaries in excess of $9 million in the aggregate during the calendar year ended December 31, 2017 or (B) requires consideration or payments by the Company or any of its Subsidiaries in excess of $25 million in the aggregate over the remaining term of such contract; |
| (iii) | any contract for the furnishing of products or services by the Company or any of its Subsidiaries, which (A) involved consideration or payments to the Company or any of its Subsidiaries in excess of $100 million in the aggregate during the calendar year ended December 31, 2017 or (B) requires consideration or payments to the Company or any of its Subsidiaries in excess of $350 million in the aggregate over the remaining term of such contract; |
| (iv) | any material partnership, joint venture, strategic alliance or other similar agreement or arrangement; |
| (v) | any executory contract relating to the acquisition or disposition of any material business (whether by merger, sale of stock, sale of assets or otherwise); |
| (vi) | any contract as obligor or guarantor relating to indebtedness for borrowed money (whether incurred, assumed, guaranteed or secured by any asset), except any such agreement with respect to indebtedness with an aggregate outstanding principal amount not exceeding $10 million; |
| (vii) | any contract containing covenants expressly limiting in any material respect the freedom of the Tiger Business to compete or engage in a product line or line of business or to operate in any jurisdiction; |
| (viii) | any contract with a sole source supplier of material products or services; |
| (ix) | any material contract containing any provision granting the other party material exclusivity or similar rights; or |
| (x) | any license or other contract that is material to the Tiger Business that restricts or grants rights to use or practice Intellectual Property Rights. |
| (b) | The Company has made available to Parent a true and complete copy of each Tiger Material Contract. Except for breaches, violations or defaults which would not reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect, (i) each of the Tiger Material Contracts is valid and in full force and effect and (ii) neither the Company nor any of its Subsidiaries, nor, to SpinCo’s knowledge, any other party to a Tiger Material Contract, has violated any provision of, or taken or failed to take any act which, with or without notice, lapse of time, or both, would constitute a default under the provisions of such Tiger Material Contract, and neither the Company nor any of its Subsidiaries has received notice that it has breached, violated or defaulted under any Tiger Material Contract. |
| (b) | NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN THE SEPARATION AGREEMENT OR THE ANCILLARY AGREEMENTS, NONE OF THE COMPANY, SPINCO OR ANY OF THEIR RESPECTIVE REPRESENTATIVES WILL HAVE OR BE SUBJECT TO ANY LIABILITY OR INDEMNIFICATION OBLIGATION TO PARENT, MERGER SUB, ANY OF THEIR RESPECTIVE REPRESENTATIVES OR TO ANY OTHER PERSON RESULTING FROM THE DISTRIBUTION TO PARENT, MERGER SUB OR THEIR RESPECTIVE REPRESENTATIVES OF, OR PARENT’S, MERGER SUB’S OR THEIR RESPECTIVE REPRESENTATIVES’ USE OF, ANY INFORMATION RELATING TO THE TIGER BUSINESS, INCLUDING ANY PROJECTIONS, FORECASTS, BUSINESS PLANS, BUDGETS, COST ESTIMATES OR OTHER MATERIAL MADE AVAILABLE TO PARENT OR ANY OF ITS REPRESENTATIVES, WHETHER ORALLY OR IN WRITING, IN CERTAIN ‘‘DATA ROOMS,’’ MANAGEMENT PRESENTATIONS, FUNCTIONAL ‘‘BREAK-OUT’’ DISCUSSIONS, ‘‘EXPERT SESSIONS,’’ DILIGENCE CALLS OR MEETINGS, RESPONSES TO QUESTIONS SUBMITTED ON BEHALF OF PARENT, MERGER SUB OR ANY OF THEIR RESPECTIVE REPRESENTATIVES OR IN ANY OTHER FORM IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (OR BY THE SEPARATION AGREEMENT OR ANY ANCILLARY AGREEMENT). |
| (c) | EACH OF THE COMPANY AND SPINCO AGREE THAT IT HAS NOT RELIED UPON ANY EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES OF ANY NATURE MADE BY OR ON BEHALF OF OR IMPUTED TO PARENT OR MERGER SUB, OR ANY OTHER PERSON, EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE 5 AND SECTION 7.04(G). |
| (b) | Each of Parent, Merger Sub and Direct Sale Purchaser is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. |
| (c) | Merger Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, the Separation Agreement and the Ancillary Agreements, and since the date of its incorporation, Merger Sub has not engaged in any business activities or conducted any operations other than in connection with or as contemplated by this Agreement, the Separation Agreement or the Ancillary Agreements. The authorized capital stock of Merger Sub consists of 100 shares of common |
| (b) | At a meeting duly called and held, the Parent Board has unanimously (i) determined that the Merger and this Agreement are advisable and has approved this Agreement and the transactions contemplated hereby, including the Merger, the Parent Share Issuance and the Parent Charter Amendment and (ii) recommended the approval by the stockholders of Parent of the Parent Share Issuance and the Parent Charter Amendment (such recommendation, the ‘‘Parent Board Recommendation’’). |
| (c) | Each of Parent and Direct Sale Purchaser has the necessary corporate power and authority to enter into the Separation Agreement and each Ancillary Agreement to which it is or will be a party, to carry out its obligations thereunder and to consummate the transactions contemplated thereby. The execution and delivery by each of Parent and Direct Sale Purchaser of the Separation Agreement and each Ancillary Agreement to which it is or will be a party, the performance by each of Parent and Direct Sale Purchaser of its obligations thereunder and the consummation by each of Parent and Direct Sale Purchaser of the transactions contemplated thereby have been, or will be, duly authorized by all requisite action on the part of Parent and Direct Sale Purchaser. The Separation Agreement and each Ancillary Agreement will be duly executed and delivered by Parent and Direct Sale Purchaser, and (assuming due authorization, execution and delivery by the other parties thereto) the Separation Agreement and each Ancillary Agreement will constitute, a legal, valid and binding obligation of Parent and Direct Sale Purchaser, enforceable against Parent and Direct Sale Purchaser in accordance with its terms (subject to the Bankruptcy Exceptions). |
| (b) | There are no outstanding bonds, debentures, notes or other indebtedness of Parent having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of Parent may vote. Except as set forth in this Section 5.05, in respect of matters permitted under Section 7.01, and for changes since May 18, 2018 resulting from the exercise or settlement of Parent Stock Awards outstanding on such date, there are no issued, reserved for issuance or outstanding (i) shares of capital stock or other voting securities of or ownership interests in Parent, (ii) securities of Parent convertible into or exchangeable for shares of capital stock or other voting securities of or ownership interests in Parent, (iii) warrants, calls, options or other rights to acquire from Parent, or other obligations of Parent to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Parent, or (iv) restricted shares, stock appreciation rights, performance units, contingent value rights, ‘‘phantom’’ stock or similar securities or rights, in each case, that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock of or voting securities of Parent (the items in clauses (i) through (iv) being referred to collectively as the ‘‘Parent Securities’’). There are no outstanding obligations of Parent or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Parent Securities. |
| (c) | The shares of Parent Common Stock to be issued as part of the Merger Consideration have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will have been validly issued and will be fully paid and nonassessable and the issuance thereof is not subject to any preemptive or other similar right. |
| (b) | All of the outstanding capital stock of or other voting securities of, or ownership interests in, each Subsidiary of Parent, is owned by Parent, directly or indirectly. There are no issued, reserved for issuance or outstanding (i) securities of Parent or any of its Subsidiaries convertible into, or exchangeable for, shares of capital stock or other voting securities of, or ownership interests in, any Subsidiary of Parent, (ii) warrants, calls, options or other rights to acquire from Parent or any of its Subsidiaries, or other obligations of Parent or any of its Subsidiaries to issue, any capital stock or other voting securities of, or ownership interests in, or any securities convertible into, or exchangeable for, any capital stock or other voting securities of, or ownership interests in, any Subsidiary of Parent or (iii) restricted shares, stock appreciation rights, performance units, contingent value rights, ‘‘phantom’’ stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock or other voting securities of, or ownership interests in, any Subsidiary of Parent (the items in clauses (i) through (iii) being referred to collectively as the ‘‘Parent Subsidiary Securities’’). There are no outstanding obligations of Parent or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of Parent Subsidiary Securities. Except for its interests in its Subsidiaries and Parent JVs, Parent does not own, directly or indirectly, any capital stock of, or other equity or voting interest in, any Person. |
| (c) | Section 5.06(c) of the Parent Disclosure Schedule sets forth a complete and correct list of all Parent JVs with revenues in excess of $25 million in 2017, including, in each case, its name, jurisdiction and form of organization and the percentage of its outstanding equity or profits interests that are owned by Parent or any of its Subsidiaries. To the knowledge of Parent as of the date of this Agreement, subject to the terms and conditions of such respective certificates of incorporation, bylaws, limited liability company agreements or similar organizational documents made available to the Company prior to the date of this Agreement, there are no outstanding options, warrants, convertible debt, other convertible instruments or other commitments obligating any Parent JV to issue, grant, extend or enter into any such option, warrant, convertible debt, other convertible instrument or other right, agreement, arrangement or commitment. |
| (b) | As of its filing date (and as of the date of any amendment), each Parent SEC Document complied, and each Parent SEC Document filed subsequent to the date hereof will comply, as to form in all material respects with the applicable requirements of the 1933 Act and 1934 Act, as the case may be. |
| (c) | As of its filing date (or, if amended or superseded by a filing prior to the date hereof, on the date of such filing), each Parent SEC Document filed pursuant to the 1934 Act did not, and each Parent SEC Document filed subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. |
| (d) | Each Parent SEC Document that is a registration statement, as amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of the date such registration statement or amendment became effective, did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. |
| (e) | Parent has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the 1934 Act). Such disclosure controls and procedures are designed to ensure that material information relating to Parent, including its consolidated Subsidiaries, is made known to Parent’s |
| (f) | Since January 1, 2015, Parent and its Subsidiaries have established and maintained a system of internal controls over financial reporting (as defined in Rule 13a-15 under the 1934 Act) sufficient to provide reasonable assurance regarding the reliability of Parent’s financial reporting and the preparation of Parent financial statements for external purposes in accordance with GAAP. Parent has disclosed, based on its most recent evaluation of internal controls prior to the date hereof, to Parent’s auditors and audit committee (i) any significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect Parent’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in internal controls. Parent has made available to SpinCo a summary of any such disclosure made by management to Parent’s auditors and audit committee since January 1, 2015. |
| (g) | Parent has not, since the enactment of the Sarbanes-Oxley Act, taken any action prohibited by Section 402 of the Sarbanes-Oxley Act. |
| (h) | Since January 1, 2015, Parent has complied in all material respects with the applicable listing and corporate governance rules and regulations of the New York Stock Exchange. As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to any of the Parent SEC Documents, and, to the knowledge of Parent, none of the Parent SEC Documents is subject to ongoing SEC review. |
| (i) | Each of the principal executive officer and principal financial officer of Parent (or each former principal executive officer and principal financial officer of Parent, as applicable) have made all certifications required by Rule 13a-14 and 15d-14 under the 1934 Act and Sections 302 and 906 of the Sarbanes-Oxley Act and any related rules and regulations promulgated by the SEC and the New York Stock Exchange, and the statements contained in any such certifications are complete and correct. |
| (j) | Since January 1, 2015, there has been no transaction, or series of similar transactions, agreements, arrangements or understandings, nor is there any proposed transaction as of the date of this Agreement, or series of similar transactions, agreements, arrangements or understandings to which Parent or any of its Subsidiaries was or is to be a party, that would be required to be disclosed under Item 404 of Regulation S-K promulgated under the 1933 Act. |
| (b) | From the Parent Balance Sheet Date until the date hereof, there has not been any action taken by Parent or any of its Subsidiaries that, if taken during the period from the date of this Agreement through the Effective Time without Parent’s consent, would constitute a breach of clause (a), (c), (i), (j) or (m) (as it relates to any of the foregoing) of Section 7.01. |
| (b) | Parent and each of its Subsidiaries is in compliance and, since January 1, 2015 has been in compliance with (i) the Foreign Corrupt Practices Act of 1977, (ii) the United Kingdom Bribery Act of 2010 and (iii) all Applicable Laws to which Parent or any of its Subsidiaries is subject relating to anti-money laundering compliance, in each case except for failures to comply or violations that would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. |
| (c) | Parent, its Subsidiaries and, to the knowledge of Parent as of the date of this Agreement, the Parent JVs and any agents or other Persons acting for, on behalf of or at the direction of Parent, its Subsidiaries or, to the knowledge of Parent as of the date of this Agreement, the Parent JVs: (i) are not, and since January 1, 2015 have not been, designated on, and are not owned or controlled by any party that is or has been designated on, any list of restricted parties maintained by any U.S. Governmental Authority, including the OFAC Specially Designated Nationals and Blocked Persons List, OFAC’s list of Foreign Sanctions Evaders, OFAC’s Sectoral Sanctions Identifications List, Commerce’s Denied Person’s List, the Commerce Entity List and the U.S. Department of State Debarred List; and (ii) since January 1, 2015, have not participated in any transaction involving such a designated Person, or any country subject to an embargo or substantial restrictions on trade under the U.S. sanctions administered by OFAC, in each case except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. |
| (b) | Except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, (i) each Lease under which Parent or any of its Subsidiaries leases, subleases or licenses any real property is valid and in full force and effect and (ii) neither Parent nor any of its Subsidiaries, nor, to Parent’s knowledge, any other party to any such Lease, has violated any provision of, or taken or failed to take any act which, with or without notice, lapse of time, or both, would constitute a default under the provisions of such Lease. |
| (b) | Except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, (i) Parent or one of its Subsidiaries owns all of the Parent Intellectual Property Rights (in each case, free and clear of any Liens), (ii) to the knowledge of Parent, (A) the operation of Parent’s and its Subsidiaries’ businesses as currently conducted does not infringe or misappropriate any Intellectual Property Rights of any Person and (B) no Person is infringing or misappropriating the Parent Intellectual Property Rights, and (iii) there is no Action pending against Parent or any of its Subsidiaries (A) alleging that any services provided, processes used or products manufactured or sold by Parent or any of its Subsidiaries infringe or misappropriate any Intellectual Property Rights of any Person or (B) challenging the validity or enforceability of any Parent Intellectual Property Rights. |
| (c) | Except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, to the knowledge of Parent, there has been no unauthorized access or malfunction of any Parent IT Assets within the past three years that has resulted in the unauthorized access or loss of any data of Parent or any of its Subsidiaries. |
| (d) | Except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, Parent uses commercially reasonable efforts to maintain the confidentiality of its Trade Secrets. |
| (a) | All Tax Returns required by Applicable Law to be filed with any Taxing authority by, or on behalf of, Parent or any of its Subsidiaries have been timely filed when due in accordance with all Applicable Law, and all such Tax Returns are, or shall be at the time of filing, true and complete. |
| (b) | Parent and each of its Subsidiaries has paid (or has had paid on its behalf) or has withheld and remitted to the appropriate Taxing authority all Taxes due and payable by it, or, where payment is not yet due, has established (or has had established on its behalf and for its sole benefit and recourse) in accordance with GAAP an adequate accrual for all Taxes through the end of the last period for which Parent and its Subsidiaries ordinarily record items on their respective books. |
| (c) | Neither Parent nor any of its Subsidiaries has granted any extension or waiver of the statute of limitations period applicable to any Tax Return, which period (after giving effect to such extension or waiver) has not yet expired, and no request for any such extension or waiver is currently pending. |
| (d) | There is no Action now pending or, to Parent’s knowledge, threatened in writing against or with respect to Parent or its Subsidiaries in respect of any Tax or Tax asset. Within the past three years, neither Parent nor any Subsidiary of Parent has received a written notice from a Taxing authority in any jurisdiction in which Parent and its Subsidiaries do not file Tax Returns or pay Taxes that Parent or any of its Subsidiaries is or may be subject to Tax (including an obligation to withhold and remit Taxes) in such jurisdictions or has or may have a duty to file Tax Returns in such jurisdictions. |
| (e) | During the five-year period ending on the Closing Date, neither Parent nor any of its Subsidiaries was (or will be) a distributing corporation or a controlled corporation in a transaction intended to be governed by Section 355 of the Code. |
| (f) | None of Parent or its Subsidiaries has participated in a ‘‘listed transaction’’ within the meaning of Treasury Regulations section 1.6011-4. |
| (g) | None of Parent or its Subsidiaries has taken or agreed to take any action that would (and none of them is aware of any fact, event, agreement, plan or other circumstance that would) prevent the Tax-Free Status of the External Transactions. As of the date hereof, Parent does not know of any reason (i) why it would not be able to deliver the Tax Representation Letters at the applicable times set forth in Section 8.07(c) or (ii) why Parent would not be able to obtain the opinion contemplated by Section 9.02(b). |
| (h) | There are no Liens for Taxes on the assets or properties of Parent and its Subsidiaries, other than Liens for Taxes not yet due and payable or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been established in accordance with GAAP. |
| (i) | Neither Parent nor any of its Subsidiaries is a party to or bound by any Tax-allocation, Tax-sharing or Tax-indemnification agreement or other similar contract or arrangement, other than (i) as of the Closing Date, the Tax Matters Agreement or (ii) any such contract or arrangement pursuant to customary commercial agreements or arrangements entered into in the ordinary course of business and not primarily related to Taxes. |
| (j) | The representations and warranties contained in this Section 5.17 (and, to the extent relating to Taxes, Section 5.18) constitute the sole and exclusive representations and warranties by Parent herein with respect to Tax matters. |
| (b) | Neither Parent nor any of its ERISA Affiliates sponsors, maintains, contributes to or has an obligation to contribute to, or has in the past six years sponsored, maintained, contributed to or had an obligation to contribute to, any employee benefit plan subject to Title IV of ERISA, including any ‘‘multiemployer plan’’ as defined in Section 3(37) of ERISA, except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect or result in liability to the Company, SpinCo or any of its Subsidiaries (including the Transferred Subsidiaries) following the Closing. |
| (c) | Except as would not reasonably be expected to have a Parent Material Adverse Effect, each Parent Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination or opinion letter from the IRS or has applied to the IRS for such a letter within the applicable remedial amendment period or such period has not expired, and nothing has occurred since the date of any such determination or opinion letter that could reasonably be expected to give the IRS grounds to revoke such determination or opinion letter. Except as would not reasonably be expected to have a Parent Material Adverse Effect, each Parent Benefit Plan (i) if intended to qualify for special tax |
| (d) | Each Parent Benefit Plan has been maintained, operated and administered in compliance with its terms and all Applicable Law, including ERISA and the Code, except for failures to comply or violations that would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. There have been no prohibited transactions or breaches of any of the duties imposed on ‘‘fiduciaries’’ (within the meaning of Section 3(21) of ERISA) by ERISA with respect to any Parent Benefit Plan that would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. No Action (other than routine claims for benefits) is pending against or involves or, to the knowledge of Parent, is threatened against or threatened to involve, any Parent Benefit Plan before any Governmental Authority, nor, to the knowledge of Parent, is there any basis for any such Action, in any case that would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. |
| (e) | No Parent Benefit Plan provides any post-retirement or post-termination of service medical, dental or life insurance benefits to any current or former Parent Service Provider (other than coverage mandated by Applicable Law), except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. |
| (f) | Except as would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, all contributions, premiums and payments that are due have been made for each Parent Benefit Plan within the time periods prescribed by the terms of such plan and Applicable Law. |
| (g) | Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby (either alone or together with any other event) will (i) entitle any Parent Service Provider to any material payment or benefit or accelerate the time of payment or vesting of any material compensation or benefits, in either case under any Parent Benefit Plan or (ii) result in the payment of any amount under a Parent Benefit Plan that would not be deductible as a result of Section 280G of the Code. Neither Parent nor any of its Subsidiaries has any obligation to gross-up, indemnify or otherwise reimburse any Parent Service Provider for any material Tax incurred by such Parent Service Provider under Section 409A or 4999 of the Code. |
| (h) | Parent and each of its Subsidiaries is conducting, and since January 1, 2015 has conducted, its business in compliance with all Applicable Laws relating to labor and employment, including those relating to labor management relations, wages, hours, overtime, discrimination, sexual harassment, civil rights, affirmative action, work authorization, immigration, safety and health and continuation coverage under group health plans, except for failures to comply or violations that would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. |
| (i) | Except as set forth in Section 5.18(i) of the Parent Disclosure Schedule, there is no formal union organizational campaigns or petitions or other material unionization activities seeking recognition of a bargaining unit in Parent, and no material unfair labor practice charges or other complaints or union representation questions are before the National Labor Relations Board or other labor board or Governmental Authority that, in either case, would reasonably be expected to have a Parent Material Adverse Effect. There is no material labor strike, slowdown or stoppage pending or, to Parent’s knowledge, threatened against or affecting Parent. |
| (j) | Section 5.18(j) of the Parent Disclosure Schedule, sets forth a true and correct list of any and all applicable collective bargaining, works council and other similar employee representative agreements (including agreements governed by Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185) with any labor organization representing employees of Parent or any of its Subsidiaries. |
| (k) | Since January 1, 2015, neither Parent nor any of its Subsidiaries has implemented any plant closing or mass layoff that required notice under any Applicable Law. |
| (i) | no written notice, order, complaint, judgment, decree, decision, fine or penalty arising under any Environmental Laws, that has not been fully resolved, has been received by Parent or any of its Subsidiaries, and there are no Actions (or, to the knowledge of Parent, governmental examinations or investigations not otherwise constituting an Action) pending or, to Parent’s knowledge, threatened which allege a violation of, or liability or obligation under, any Environmental Laws by or of Parent or any of its Subsidiaries; |
| (ii) | Parent and each of its Subsidiaries possess all Parent Permits required under applicable Environmental Laws and are, and since January 1, 2015 have been, in compliance with the terms of such Parent Permits; |
| (iii) | the operations of Parent and each of its Subsidiaries are, and since January 1, 2015 have been, in compliance with applicable Environmental Laws; and |
| (iv) | neither Parent nor any of its Subsidiaries is conducting, or has received written notice asserting that it is or may be liable or obligated under applicable Environmental Laws or under the terms of a third party agreement to conduct or pay for, any investigation, cleanup, remediation or similar activities with respect to the actual or alleged Release or threatened Release of any Hazardous Materials. |
| (b) | Except as set forth in this Section 5.19, no representations or warranties are being made by Parent or Merger Sub with respect to matters arising under or relating to Environmental Laws. |
| (i) | Leases pertaining to any Parent Material Real Property; |
| (ii) | any contract for the purchase of products or for the receipt of services, which (A) involved consideration or payments by Parent and its Subsidiaries in excess of $9 million in the aggregate during the calendar year ended December 31, 2017 or (B) requires consideration or payment by Parent and its Subsidiaries in excess of $25 million in the aggregate over the remaining term of such Contract; |
| (iii) | any contract for the furnishing of products or services by Parent or any of its Subsidiaries, which (A) involved consideration or payments to Parent and its Subsidiaries in excess of $100 million in the aggregate during the calendar year ended December 31, 2017 or (B) requires consideration or payments to Parent and its Subsidiaries in excess of $350 million in the aggregate over the remaining term of such contract; |
| (iv) | any material partnership, joint venture, strategic alliance or other similar agreement or arrangement; |
| (v) | any executory contract relating to the acquisition or disposition of any material business (whether by merger, sale of stock, sale of assets or otherwise); |
| (vi) | any contract as obligor or guarantor relating to indebtedness for borrowed money (whether incurred, assumed, guaranteed or secured by any asset), except any such agreement with respect to indebtedness with an aggregate outstanding principal amount not exceeding $10 million; |
| (vii) | any contract containing covenants expressly limiting in any material respect the freedom of Parent or any of its Subsidiaries to compete or engage in a product line or line of business or to operate in any jurisdiction; |
| (viii) | any contract with a sole source supplier of material products or services; |
| (ix) | any material contract containing any provision granting the other party material exclusivity or similar rights; or |
| (x) | any license or other contract that is material to Parent and its Subsidiaries that restricts or grants rights to use or practice Intellectual Property Rights. |
| (b) | Parent has made available to the Company a true and complete copy of each Parent Material Contract. Except for breaches, violations or defaults which would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect, (i) each of the Parent Material Contracts is valid and in full force and effect and (ii) neither the Company nor any of its Subsidiaries, nor, to Parent’s knowledge, any other party to a Parent Material Contract, has violated any provision of, or taken or failed to take any act which, with or without notice, lapse of time, or both, would constitute a default under the provisions of such Parent Material Contract, and neither Parent nor any of its Subsidiaries has received notice that it has breached, violated or defaulted under any Parent Material Contract. |
| (b) | As of the date of this Agreement, the Parent Commitment Letter, in the form so delivered, is in full force and effect and is a legal, valid and binding obligation of Parent and, to the knowledge of Parent, the other parties thereto (in each case, subject to the Bankruptcy Exceptions). As of the date of this Agreement, no event has occurred which, with or without notice, lapse of time or both, would (i) constitute a default or breach on the part of Parent or, to Parent’s knowledge, any other party thereto under any term or condition of the Parent Commitment Letter, (ii) assuming satisfaction of the conditions precedent set forth in Article IX of this Agreement, constitute or result in a failure to satisfy a condition precedent set forth in the Parent Commitment Letter, or (iii) to Parent’s knowledge and assuming satisfaction of the conditions precedent set forth in Article IX of this Agreement, otherwise result in any portion of the Financing being unavailable to Parent on the Closing Date. The proceeds of the Financing under the Parent Commitment Letter (together with unrestricted cash on hand of Parent and its Subsidiaries) will provide Parent and its Subsidiaries with financing sufficient to pay the Direct Sale Purchase Price and to pay or reimburse all fees and expenses contemplated to be paid by Parent or its Subsidiaries hereunder (collectively, the ‘‘Financing Obligations’’); provided that between the date of this Agreement and the Closing Date, Parent and its Subsidiaries shall maintain unrestricted cash in an amount that, together with the proceeds of the Financing, would be sufficient to pay the Financing Obligations. As of the date of this Agreement, other than as set forth in the Parent Commitment Letter, there are no conditions precedent to the funding of the full amount of the Financing. As of the date of this Agreement, and assuming satisfaction of the conditions precedent set forth in Article IX of this Agreement, Parent has no reason to believe that any of the conditions precedent to the funding of the Financing will not be satisfied on a timely basis or that the Financing will not be fully available to Parent as set forth in the Parent Commitment Letter. |
| (b) | NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN THE SEPARATION AGREEMENT OR THE ANCILLARY AGREEMENTS, NONE OF PARENT, MERGER SUB OR ANY OF THEIR RESPECTIVE REPRESENTATIVES WILL HAVE OR BE SUBJECT TO ANY LIABILITY OR INDEMNIFICATION OBLIGATION TO THE COMPANY, SPINCO, ANY OF THEIR RESPECTIVE REPRESENTATIVES OR TO ANY OTHER PERSON RESULTING FROM THE DISTRIBUTION TO THE COMPANY, SPINCO OR THEIR RESPECTIVE REPRESENTATIVES OF, OR THE COMPANY’S, SPINCO’S OR THEIR RESPECTIVE REPRESENTATIVES’ USE OF, ANY INFORMATION RELATING TO THE BUSINESS OF PARENT AND ITS SUBSIDIARIES, INCLUDING ANY PROJECTIONS, FORECASTS, BUSINESS PLANS, BUDGETS, COST ESTIMATES OR OTHER MATERIAL MADE AVAILABLE TO PARENT OR ANY OF ITS REPRESENTATIVES, WHETHER ORALLY OR IN WRITING, IN CERTAIN ‘‘DATA ROOMS,’’ MANAGEMENT PRESENTATIONS, FUNCTIONAL ‘‘BREAK-OUT’’ DISCUSSIONS, ‘‘EXPERT SESSIONS,’’ DILIGENCE CALLS OR MEETINGS, RESPONSES TO QUESTIONS SUBMITTED |
| (c) | EACH OF PARENT AND MERGER SUB AGREE THAT IT HAS NOT RELIED UPON ANY EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES OF ANY NATURE MADE BY OR ON BEHALF OF OR IMPUTED TO THE COMPANY OR SPINCO, OR ANY OTHER PERSON, EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE 4. |
| (a) | amend the certificate of incorporation, bylaws or other similar organizational documents of SpinCo or any Transferred Subsidiary; |
| (b) | (i) split, combine or reclassify any shares of capital stock of SpinCo or any Transferred Subsidiary or (ii) redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any SpinCo Securities or any Tiger Subsidiary Securities; |
| (c) | (i) issue, deliver or sell, or authorize the issuance, delivery or sale of, any SpinCo Securities or Tiger Subsidiary Securities, other than the issuance, delivery or sale of any Tiger Subsidiary Securities to SpinCo or any other Transferred Subsidiary or (ii) amend any term of any SpinCo Security or any Tiger Subsidiary Security; |
| (d) | acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any material amount of assets, securities, properties, interests or businesses, other than (i) pursuant to existing contracts or commitments, (ii) acquisitions of goods or services in the ordinary course of business, or (iii) acquisitions of assets, securities, properties or interests in an amount not to exceed $10 million individually or $50 million in the aggregate; |
| (e) | sell, lease or otherwise transfer any assets, securities, properties, interests or businesses of the Tiger Business, other than (i) pursuant to existing contracts or commitments, and (ii) sales of inventory or other assets in the ordinary course of business; |
| (f) | make any material loans, advances or capital contributions to, or investments in, any other Person; |
| (g) | incur any indebtedness for borrowed money or guarantees thereof, other than any indebtedness or guarantee incurred in the ordinary course of business; |
| (h) | except as required by Applicable Law, the terms of a Tiger Benefit Plan or collective bargaining or other labor agreement as in effect on the date hereof, (i) grant any material severance, retention or termination payment to, or enter into or materially amend any severance, retention, termination, employment, change in control or severance agreement with, any Tiger Service Provider, (ii) materially increase the compensation or benefits provided to any Tiger Service Provider, other than in the ordinary course of business based on the normal review cycle (provided that the requirement to be based on the normal review cycle will not apply to Key Tiger Service Providers), (iii) grant any equity or equity-based awards to, or discretionarily accelerate the vesting or payment of any such awards held by, any Tiger Service Provider, other than in the ordinary course of business based on the normal review cycle (provided that the requirement to be based on the normal review cycle will not apply to Key Tiger Service Providers), (iv) hire, or terminate the employment (other than for cause) of, any Key Tiger Service Provider, or (v) hire any Tiger Service Provider, other than as permitted under the terms of the Employee Matters Agreement; |
| (i) | change the methods of accounting of the Tiger Business, except as required by concurrent changes in GAAP or in Regulation S-X of the 1934 Act; |
| (j) | other than in the ordinary course of business, (i) make any change (or file any such change) in any method of Tax accounting or any annual Tax accounting period, (ii) make, change or rescind any Tax election, (iii) settle or compromise any Tax liability or consent to any claim or assessment relating to Taxes, (iv) file any amended Tax Return or claim for refund, (v) enter into any closing agreement relating to Taxes, or (vi) waive or extend the statute of limitations in respect of Taxes; in each case, to the extent that doing so would reasonably be expected to result in a material incremental cost to Parent, SpinCo or any of their respective Subsidiaries; |
| (k) | settle, or offer or propose to settle any material Action involving the Tiger Business, other than in the ordinary course of business; |
| (l) | fail to use reasonable best efforts to maintain (with insurance companies substantially as financially responsible as their existing insurers) insurance against at least such risks and losses as are consistent in all material respects with the past practice of the Tiger Business, except to the extent such actions affect similarly situated businesses of the Company and its Subsidiaries and do not disproportionately affect the Tiger Business; or |
| (m) | agree or commit to do any of the foregoing. |
| (b) | Subject to Section 8.11(d), any information obtained pursuant to this Section 6.04 shall be subject to the Confidentiality Agreement, provided that the term thereof shall be deemed to extend through the second anniversary of the date of this Agreement in respect of such information. |
| (b) | For the quarterly period ending March 31, 2018 and each subsequent quarterly period ending prior to the Closing Date, other than any calendar quarter ending December 31 (each, an ‘‘Interim Period’’), the Company shall deliver to Parent the combined unaudited financial statements of the Tiger Business and, if financial statements of SpinCo are required by the rules and regulations of the SEC to be included in the Registration Statements, for SpinCo (except as set forth on Section 6.05 of the SpinCo Disclosure Schedule) as of the end of, and for, such Interim Period (the ‘‘Interim Financial Statements’’) consisting of the combined balance sheets as of the end of such Interim Period and combined statements of income, comprehensive income and cash flows for such Interim Period (and the portion of the fiscal year then ended) and the corresponding period of the prior fiscal year, which will, in each case, have been reviewed by the independent registered public accounting firm for the Tiger Business and, if financial statements of SpinCo are required by the rules and regulations of the SEC to be included in the Registration Statements, for SpinCo as provided in AS 4105, Interim Financial Information. The Interim Financial Statements will be delivered as promptly as practicable following the end of the corresponding Interim Period (but in no event before the public filing of the related Company SEC Document) and (i) in the case of the Interim Period ended March 31, 2018, by no later August 9, 2018 and (ii) in the case of each other Interim Period, by no later than 40 days after the end of such Interim Period. |
| (b) | The Company shall, and shall cause its Subsidiaries to, and shall instruct its Representatives to, immediately cease and cause to be terminated all existing discussions or negotiations with any Third Party and its Representatives conducted prior to the execution of this Agreement with respect to any Competing SpinCo Transaction. From and after the date hereof through the nine-month anniversary of the date of this Agreement: (i) the Company shall not, and shall cause its Subsidiaries not to, and the Company shall instruct its Representatives not to, release any third party from, or waive any provision of, any confidentiality or, subject to applicable duties of its directors under Applicable Law, standstill agreement to which it or one of its Affiliates is a party in connection with a Competing SpinCo Transaction and (ii) the Company shall reasonably promptly (and in any event no later than the next Business Day) notify Parent, orally and in writing, after the receipt by the Company or any of its Representatives of any proposal, inquiry, offer or request (or any amendment thereto) with respect to a Competing SpinCo Transaction, including in connection therewith any request for discussions or negotiations and any request for information relating to the Company or any of its Affiliates with respect to the Tiger Business, or for access to the business, properties, assets, books or records of the Company or any of its Affiliates with respect to the Tiger Business. The receipt by the Company of a proposal in respect of a Competing SpinCo Transaction shall not in any way or manner alter the obligations of SpinCo or the Company under this Agreement, the Separation Agreement or any other Ancillary Agreement. |
| (a) | amend its certificate of incorporation, bylaws or other similar organizational documents, except for the Parent Charter Amendment; |
| (b) | (i) split, combine or reclassify any shares of its capital stock, (ii) declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, except for (A) dividends by any of its wholly-owned Subsidiaries and (B) regular quarterly cash dividends by Parent with customary record and payment dates on the shares of Parent Common Stock not in excess of $0.12 per share for the quarter ended June 30, 2018 and $0.14 per quarter thereafter, or (iii) redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any Parent Securities or any Parent Subsidiary Securities, other than in connection with the cashless exercise of stock options and any other equity incentives; |
| (c) | (i) issue, deliver or sell, or authorize the issuance, delivery or sale of, any Parent Securities or any Parent Subsidiary Securities, other than the issuance, delivery or sale of (A) any shares of the Parent Common Stock upon the exercise or settlement of Parent Stock Awards that are outstanding on the date of this Agreement in accordance with the terms of those Parent Stock Awards on the date of this Agreement and (B) any Parent Subsidiary Securities to Parent or any other Subsidiary of Parent or (ii) amend any term of any Parent Security or any Parent Subsidiary Security; |
| (d) | acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any material amount of assets, securities, properties, interests or businesses, other than (i) pursuant to existing contracts or commitments, (ii) acquisitions of goods or services in the ordinary course of business or (iii) acquisitions of assets, securities, properties or interests in an amount unless it would reasonably be expected to result in a Credit Rating Event; |
| (e) | sell, lease or otherwise transfer any of its assets, securities, properties, interests or businesses, other than (i) pursuant to existing contracts or commitments and (ii) sales of inventory or other assets in the ordinary course of business; |
| (f) | make any material loans, advances or capital contributions to, or investments in, any other Person to the extent that any such loan, advance, capital contribution or investment would reasonably be expected, in any material respect, to result in a delay in obtaining, or otherwise adversely affect the ability of the parties to obtain, any antitrust approval or consent necessary to consummate the transactions contemplated hereby; |
| (g) | except as required by Applicable Law, the terms of a Parent Benefit Plan or collective bargaining or other labor agreement as in effect on the date hereof, (i) grant any material severance, retention or termination payment to, or enter into or materially amend any severance, retention, termination, employment, change in control or severance agreement with, any Key Parent Service Provider, (ii)materially increase the compensation or benefits provided to any Key Parent Service Provider, other than in the ordinary course of business, or (iii)grant any equity or equity-based awards to, or discretionarily accelerate the vesting or payment of any such awards held by, any Key Parent Service Provider, other than in the ordinary course of business; |
| (h) | change its methods of accounting, except as required by concurrent changes in GAAP or in Regulation S-X of the 1934 Act; |
| (i) | other than in the ordinary course of business, (i) make any change (or file any such change) in any method of Tax accounting or any annual Tax accounting period; (ii) make, change or rescind any Tax election; (iii) settle or compromise any Tax liability or consent to any claim or assessment relating to Taxes; (iv) file any amended Tax Return or claim for refund; (v) enter into any closing agreement relating to Taxes; or (vi) waive or extend the statute of limitations in respect of Taxes; in each case, to the extent that doing so would reasonably be expected to result in a material incremental cost to Parent, SpinCo or any of their respective Subsidiaries; |
| (j) | settle, or offer or propose to settle any material Action involving or against Parent or any of its Subsidiaries without first consulting with the Company and giving due consideration to the Company’s views in respect of such settlement, other than, , in the ordinary course of business; provided that nothing herein shall supersede Section 7.11; |
| (k) | fail to use reasonable best efforts to maintain (with insurance companies substantially as financially responsible as their existing insurers) insurance against at least such risks and losses as are consistent in all material respects with the past practice of the business of Parent and its Subsidiaries; or |
| (l) | agree or commit to do any of the foregoing. |
| (b) | If, on the date of the Parent Stockholder Meeting, Parent has not received proxies representing a sufficient number of shares of Parent Common Stock to obtain the Parent Stockholder Approval, Parent shall at its election or upon written request of the Company adjourn the Parent Stockholder Meeting until such date as shall be mutually agreed upon by Parent and the Company, which date shall not be less than five days nor more than 10 days after the date of adjournment, and subject to the terms and conditions of this Agreement shall continue to use its reasonable best efforts, together with its proxy solicitor, to assist in the solicitation of proxies from stockholders relating to the Parent Stockholder Approval. Parent may not adjourn the Parent Stockholder Meeting except in accordance with this Section 7.03(b) and shall not adjourn the Parent Stockholder Meeting more than one time pursuant to this Section 7.03(b) unless mutually agreed by Parent and the Company. |
| (b) | Notwithstanding Section 7.04(a), at any time prior to the receipt of the Parent Stockholder Approval: |
| (i) | Parent, directly or indirectly through its Representatives, may (A) engage in negotiations or discussions with any Third Party and its Representatives that, subject to Parent’s compliance with Section 7.04(a), has made after the date of this Agreement a bona fide, written Acquisition Proposal that the Parent Board reasonably determines is or would reasonably be expected to lead to a Superior Proposal and (B) furnish to such Third Party or its Representatives non-public information relating to Parent or any of its Subsidiaries pursuant to a confidentiality agreement (a copy of which shall be provided for informational purposes only to the Company) with such |
| (ii) | Subject to compliance with Section 7.04(a) and Section 7.04(d), the Parent Board may make an Adverse Recommendation Change (A) following receipt of a Superior Proposal or (B) in response to an Intervening Event, |
| (c) | Parent shall advise the Company on a prompt basis of the status and terms of any discussions and negotiations referred to in Section 7.04(b) with the Third Party. In addition, Parent shall notify the Company promptly (but in no event later than the next Business Day) after receipt by Parent (or any of its Representatives) of any Acquisition Proposal or any request for information relating to Parent or any of its Subsidiaries or for access to the business, properties, assets, books or records of Parent or any of its Subsidiaries by any Third Party that has made, is seeking to make or would reasonably be expected to make, an Acquisition Proposal. Parent shall provide such notice orally and in writing and shall identify the Third Party making, and the terms and conditions of, any such Acquisition Proposal, indication or request. Parent shall keep the Company reasonably informed, on a prompt basis, of the status and details of any such Acquisition Proposal, indication or request and shall promptly (but in no event later than the next Business Day after receipt) provide to the Company copies of all correspondence and written materials sent or provided to Parent or any of its Subsidiaries or any of its or their Representatives that describes any material terms or conditions of any Acquisition Proposal (as well as written summaries of any oral communications addressing such matters). Any material amendment to any Acquisition Proposal will be deemed to be a new Acquisition Proposal for purposes of Parent’s compliance with this Section 7.04(c). |
| (d) | Further, the Parent Board shall not make an Adverse Recommendation Change, unless (i) if such Adverse Recommendation Change is to be taken in circumstances involving or relating to an Acquisition Proposal, such Acquisition Proposal constitutes a Superior Proposal, (ii) Parent promptly provides written notice to the Company at least five Business Days before taking such action of its intention to do so, containing (A) in the case of any action intended to be taken in circumstances involving an Acquisition Proposal, the material terms of such Acquisition Proposal, including the most current version of the proposed agreement under which such Acquisition Proposal is proposed to be consummated and the identity of the Third Party making the Acquisition Proposal or (B) in the case of any action to be taken in circumstances where there has been an Intervening Event, a reasonably detailed description of the underlying facts giving rise to, and the reasons for taking, such action, and (iii) the Company does not make, within five Business Days after its receipt of that written notification, an offer that (A) in the case of any action intended to be taken in circumstances involving an Acquisition Proposal, is at least as favorable to the stockholders of Parent as such Acquisition Proposal (it being understood and agreed that any amendment to the financial terms or other material terms of such Acquisition Proposal shall require a new written notification from Parent and will give rise to an additional notice period under this Section 7.04(d) ending on the later of (x) the expiration of the original five Business Day notice period and (y) three Business Days following such new written notification) or (B) in the case of any action to be taken in circumstances where there has been an Intervening Event, obviates the need for taking such action. Parent agrees that, during the five-Business |
| (e) | For purposes of this Agreement, ‘‘Superior Proposal’’ means an unsolicited written Acquisition Proposal for a majority of the outstanding shares of Parent Common Stock or a majority of the consolidated assets of Parent and its Subsidiaries on terms that the Parent Board determines by a majority vote, after considering the advice of a financial advisor and outside legal counsel and taking into account all the terms and conditions of the Acquisition Proposal, including any break-up fees, expense reimbursement provisions and conditions to consummation (and expected timing of consummation relative to the transactions contemplated by this Agreement), are more favorable to Parent’s stockholders than as provided hereunder (taking into account any proposal by the Company to amend the terms of this Agreement pursuant to Section 7.04(d)), which the Parent Board determines is reasonably likely to be consummated and for which financing, if a cash transaction (whether in whole or in part), is then fully committed or reasonably determined to be available by the Parent Board. |
| (f) | For purposes of this Agreement, ‘‘Intervening Event’’ means material events or changes in circumstances (i) the existence or consequences of which were not known to, or reasonably foreseeable by, Parent as of or prior to the date hereof and (ii) that do not relate to or involve any Acquisition Proposal; provided that in no event shall any changes resulting from the following constitute or be deemed to contribute to or otherwise be taken into account in determining whether there has been an Intervening Event: (A) changes (or proposed changes) in GAAP, the regulatory accounting requirements applicable to any industry in which the Company, SpinCo or any of their respective Subsidiaries operate or Applicable Law, in each case to the extent affecting the Tiger Business, (B) changes in the financial, credit or securities markets (including changes in prevailing interest rates, credit availability and liquidity, currency exchange rates, price levels or trading volumes in any securities market) or general economic or political conditions, in each case to the extent affecting the Tiger Business, (C) changes or conditions generally affecting the industry or segments thereof in which the Company, SpinCo or any of their respective Subsidiaries operate, in each case to the extent affecting the Tiger Business, (D) acts of war, sabotage or terrorism or natural disasters, in each case to the extent affecting the Tiger Business, (E) the announcement of the transactions contemplated by this Agreement, the Separation Agreement or any Ancillary Agreement (including the Internal Reorganization, the SpinCo Transfer, the Direct Sale, the Distribution and the Merger) or the identity of the parties hereto, including, in each case, with respect to employees, customers, distributors, suppliers, financing sources, landlords, licensors and licensees , (F) (1) any failure by Parent or any of its Subsidiaries, the Company or any of its Subsidiaries or the Tiger Business to meet any internal or published budgets, projections, forecasts or predictions of financial performance for any period or (2) any change in Parent’s or the Company’s stock price or trading volume (it being understood that the underlying cause of, or factors contributing to, any such failure or change referred to in clause (1) or (2) may be taken into account in determining whether an Intervening Event has occurred, unless such underlying cause or factor would otherwise be excepted by another clause of this definition), (G) actions required or expressly contemplated by this Agreement to be taken by Parent, Merger Sub, the Company, SpinCo or any of their respective Affiliates, (H) actions taken by the Company, SpinCo or any of their respective Affiliates at the written direction of, or with the written consent of, Parent or (I) any stockholder or derivative litigation arising from or relating to this Agreement or the transactions contemplated hereby. |
| (g) | Parent shall, and shall cause its Subsidiaries and its and their Representatives to, cease immediately and cause to be terminated any and all existing activities, discussions or negotiations, if any, with any Third Party and its Representatives conducted prior to the date hereof with respect to any Acquisition Proposal and shall use its reasonable best efforts to cause any such Third Party (together with its Representatives) that has executed a confidentiality agreement within the 12-month period prior to the date hereof and that is in possession of confidential information heretofore furnished by or on behalf of Parent or any of its Subsidiaries (and all analyses and other materials prepared by or on behalf of such Person that contains, reflects or analyzes that information) to return or destroy all such information as |
| (h) | Parent shall promptly inform its directors, officers and financial advisors, and shall cause its Subsidiaries promptly to inform their respective directors, officers and financial advisors, of the obligations under this Section 7.04. |
| (b) | For six years after the Effective Time, Parent shall cause to be maintained in effect provisions in the Surviving Corporation’s and each Transferred Subsidiary’s certificate of incorporation and bylaws (or in such documents of any successor to the business of the Surviving Corporation or any Transferred Subsidiary) regarding elimination of liability of directors, indemnification of officers, directors and employees and advancement of expenses that are no less advantageous to the intended beneficiaries than the corresponding provisions in existence on the date of this Agreement. |
| (c) | If Parent, the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that the successors and assigns of Parent or the Surviving Corporation, as the case may be, shall assume the obligations set forth in this Section 7.06. |
| (d) | The rights of each Indemnified Person under this Section 7.06 shall be in addition to any rights such Person may have under the certificate of incorporation or bylaws of SpinCo or any of its Subsidiaries, or under Delaware Law or any other Applicable Law or under any agreement of any Indemnified Person with SpinCo or any of the Transferred Subsidiaries. These rights shall survive consummation of the Merger and are intended to benefit, and shall be enforceable by, each Indemnified Person. |
| (b) | Any information obtained pursuant to this Section 7.09 shall be subject to the Confidentiality Agreement, provided that the term thereof shall be deemed to extend through the second anniversary of this Agreement in respect of such information. |
| (b) | Notwithstanding anything herein to the contrary, the parties acknowledge and agree that at any time on or after the Closing Date, (i) the Company may, in its sole discretion, take any action to terminate, obtain release of or otherwise limit its liability under any and all outstanding Company Credit Support Instruments and (ii) neither the Company nor any of its applicable Affiliates will have any obligation to renew any guarantees, letters of credit, comfort letters, bonds, sureties or other credit support or assurances issued on behalf of any of SpinCo, the Transferred Subsidiaries or the Tiger Business after the expiration thereof. |
| (b) | In furtherance and not in limitation of the foregoing, each of Parent, the Company and SpinCo shall: |
| (i) | (A) cooperate with each other party in determining whether any applications, notices, registrations and requests are required or advisable to be filed with any Governmental Authority in order to consummate the transactions contemplated hereby; (B) file, individually or jointly, as appropriate, such applications, notices, registrations and requests as may be required or advisable to be filed by it with any Governmental Authority in order to consummate the transactions contemplated hereby, including (1) an appropriate filing of a notification and report form or forms, as applicable, pursuant to the HSR Act with respect to the transactions contemplated hereby, as promptly as practicable and (2) any other filings and clearances or expiration of waiting periods required in order to consummate the transactions contemplated hereby, as promptly as practicable; and (C) supply as promptly as practicable any additional information and documentary material that may be requested by any such Governmental Authority; |
| (ii) | subject to Applicable Law relating to the sharing of information, furnish the other party or parties, as applicable, with copies of all documents and correspondence (A) prepared by or on behalf of such party or parties for any Governmental Authority and affording the other party or parties, as applicable, opportunity to comment and participate in responding, where appropriate; and (B) received by or on behalf of such party or parties from any Governmental Authority, in each case in connection with any such consent, authorization, order or approval; provided that materials may be redacted (i) to remove references concerning valuation of the Tiger Business, the business of the Company or the business of Parent and its Subsidiaries or (ii) as necessary to address reasonable attorney-client or other privilege concerns; and |
| (iii) | consult with and keep the other parties hereto informed as to the status of such matters. |
| (c) | The parties shall share the right to control and direct the process by which the parties seek to obtain the approvals, consents, registrations, permits, authorizations and other confirmations contemplated by this Section 8.01; provided, however, that, following consultation with the Company and after giving due consideration to the Company’s views, Parent, acting reasonably and in good faith, shall have the right to determine the strategy and implementation of the strategy for obtaining any and all necessary antitrust consents or approvals. No party shall meet or engage in material conversations with any Governmental Authority or representative of such Governmental Authority in connection with obtaining any such consent, authorization, order and approval unless, to the extent reasonably practicable, it consults with the other party in advance and, to the extent not precluded by Applicable Law or regulation, offers the other party the opportunity to participate in such meeting or conversation. The |
| (d) | Notwithstanding anything in this Section 8.01 to the contrary, Parent shall not be required in connection with its efforts to obtain any antitrust consents or approvals, to (i) litigate, appeal any such litigation, or enter into any settlement, undertaking, consent decree, stipulation or agreement with any Governmental Authority in connection with the transactions contemplated hereby, or (ii) effect any disposition, licensing or holding separate of assets or lines of business or taking any other action (or otherwise agreeing to do any of the foregoing) with respect to any of its or any of its Affiliates’ business, assets or properties or the Tiger Business in connection with its efforts to obtain any antitrust consents or approvals. Notwithstanding anything in this Section 8.01 to the contrary, neither the Company nor SpinCo shall be required, in connection with its efforts to obtain any antitrust consents or approvals, to (x) litigate, appeal any such litigation, or enter into any settlement, undertaking, consent decree, stipulation or agreement with any Governmental Authority in connection with the transactions contemplated hereby except that Parent and SpinCo shall be required to litigate, or appeal any such litigation, to the extent reasonably directed to do so by Parent in the Parent’s exercise of its authority pursuant to Section 8.01(c), (y) effect any disposition, licensing or holding separate of assets or lines of business or taking any other action (or otherwise agreeing to do any of the foregoing) with respect to any of its or any of its Affiliates’ business, assets or properties other than the Tiger Business as set forth in the following clause, or (z) effect any disposition, licensing or holding separate of assets or lines of business or taking any other action (or otherwise agreeing to do any of the foregoing) with respect to the Tiger Business that is not in any such case conditioned on the occurrence of the Closing. |
| (b) | The Proxy Statement shall (i) state that the Parent Board has approved this Agreement and the transactions contemplated hereby and approved the Parent Share Issuance and the Parent Charter Amendment, and (ii) include the Parent Board Recommendation (except to the extent that Parent effects an Adverse Recommendation Change in accordance with Section 7.04). |
| (c) | Parent and the Company, as applicable, shall advise the other promptly after receiving oral or written notice of (i) the time when a Registration Statement has become effective or any supplement or amendment to the Proxy Statement or a Registration Statement has been filed, (ii) the issuance of any stop order, (iii) the suspension of the qualification for offering or sale in any jurisdiction of the Parent Common Stock issuable in connection with the Merger or the SpinCo Common Stock issuable in connection with the Distribution, or (iv) any oral or written request by the SEC for amendment of the Proxy Statement, a Registration Statement or the Schedule TO or SEC comments thereon or requests by the SEC for additional information. Parent and the Company shall promptly provide each other with copies of any written communication from the SEC and convey to each other summaries of any oral communications with the SEC, in each case, with respect to the Proxy Statement, the Registration Statements or the Schedule TO and shall cooperate to prepare appropriate responses thereto (and will provide each other with copies of any such responses given to the SEC) and make such modifications to the Proxy Statement, the Registration Statements and the Schedule TO as shall be reasonably appropriate. |
| (d) | If, at any time prior to the Effective Time, any event or circumstance shall be discovered by a party hereto that should be set forth in an amendment or a supplement to a Registration Statement, the Proxy Statement or the Schedule TO so that any such document would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, such party shall promptly inform the other parties hereto and the parties hereto shall cause an appropriate amendment or supplement describing such information to be promptly filed with the SEC and, to the extent required by Applicable Law, disseminated to stockholders. |
| (e) | In connection with the filing of the Proxy Statement, the Registration Statements, the Schedule TO and other SEC filings contemplated hereby, each of the Company and Parent shall use its reasonable best efforts to (i) cooperate with the other to prepare pro forma financial statements that comply with the rules and regulations of the SEC to the extent required for such filings, including the requirements of Regulation S-X and (ii) provide and make reasonably available upon reasonable notice the senior management employees of the Company or Parent, as the case may be, to discuss the materials prepared and delivered pursuant to this Section 8.02(e). |
| (a) | any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement; |
| (b) | any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; and |
| (c) | any Actions commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting the Tiger Business or Parent or any of its Subsidiaries, as the case may be, that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to any Section of this Agreement or that relate to the consummation of the transactions contemplated by this Agreement. |
| (b) | Parent and the Company shall cooperate and use their respective reasonable best efforts in order for (i) Parent to obtain the opinion of Parent Tax Counsel (or, if Parent Tax Counsel is unwilling or unable to issue the opinion, a written opinion of an Alternative Tax Counsel reasonably acceptable to Parent and the Company), in form and substance reasonably acceptable to Parent, dated as of the Closing Date, to the effect that, on the basis of the facts and customary representations and assumptions set forth or referred to in such opinion and the Tax Representation Letters and on the assumption that the conclusion in clause (iii) of this Section 8.07(b) is correct, for U.S. federal income Tax purposes the Merger will qualify as a ‘‘reorganization’’ within the meaning of Section 368(a) of the Code and that each of Parent, Merger Sub and SpinCo will be a party to the reorganization within the meaning of Section 368(b) of the Code (the ‘‘Parent Merger Tax Opinion’’); (ii) the Company to obtain the opinion of Company Tax Counsel (or, if Company Tax Counsel is unwilling or unable to issue the opinion, a written opinion of an Alternative Tax Counsel reasonably acceptable to Parent and the Company), in form and substance reasonably acceptable to the Company, dated as of the Closing Date, to the effect that, on the basis of the facts and customary representations and assumptions set forth or |
| (c) | Parent, the Company and SpinCo, and others, if required, shall execute and deliver to Company Tax Counsel, Parent Tax Counsel, an Alternative Tax Counsel or an Alternative Separation Opinion Tax Counsel, as the case may be, the Tax Representation Letters as of (i) the Closing Date and (ii) the date for filing any Tax opinion required to be filed with the SEC in connection with the filing of either of the Registration Statements; provided, however, that (x) it shall not be a breach of this Section 8.07(c) if a Person is unable to make a representation by reason of the fact that such Person does not believe such representation to be accurate and (y) each of the Company and Parent, respectively, shall be entitled to a reasonable amount of time to provide the other party with written comments to the Tax Representation Letters in support of the Company RMT Tax Opinions and the Parent Merger Tax Opinion, respectively. |
| (d) | Immediately prior to the Closing, the Company shall, or shall cause SpinCo to, deliver to Parent (i) a certificate from SpinCo, dated as of the Closing Date and prepared in accordance with Treasury Regulations sections 1.897-2(h) and 1.1445-2(c)(3), stating that equity interests in SpinCo are not ‘‘United States real property interests,’’ together with (ii) notice of such certificate to the IRS in accordance with Treasury Regulations section 1.897-2(h) (which notice shall be mailed to the IRS by SpinCo following the Closing in accordance with Treasury Regulations section 1.897-2(h)), in case of clause (i) and (ii), in form and substance reasonably acceptable to Parent. |
| (e) | Section 3 of the Form of Tax Matters Agreement is hereby incorporated in and made a part of this Agreement as if set forth in full herein. |
| (f) | In the event that the Ruling has not been obtained at the time that all of the conditions set forth in Article 9 (other than the Company Separation Tax Opinion Condition) have been satisfied or, to the extent permissible, waived by the party or parties entitled to the benefit of such conditions or, with respect to conditions that by their nature are to be satisfied at the Closing, are able to be satisfied at such time (the date on which such time occurs, as mutually agreed in good faith by the parties, the ‘‘Restructuring Commencement Date’’), then (x) the Company shall distribute (and not retain) such number of shares of SpinCo Common Stock as would permit the Company Separation Tax Opinion to be issued without receipt of the Ruling, and (y) if and to the extent consistent with the satisfaction of the Company Separation Tax Opinion Condition, the Company and Parent shall modify the Internal Reorganization such that the amount of the Basis Adjustments (as defined in the Form of Tax Matters Agreement) approximates as closely as reasonably possible the amount of Basis Adjustments that |
| (g) | Except as otherwise expressly provided herein, this Agreement shall not govern Tax matters (including any administrative, procedural and related matters thereto), which shall be exclusively governed by the Tax Matters Agreement. |
| (b) | Subject to the applicable terms of the Separation Agreement, from time to time after the Closing, without additional consideration, each party hereto shall, and shall cause its Affiliates to, execute and deliver such further instruments and take such other action as may be necessary or is reasonably requested by another party hereto to make effective the transactions contemplated by this Agreement and the Separation Agreement. |
| (c) | Following the Closing, Parent shall take all action necessary to cause SpinCo and the Transferred Subsidiaries to perform their respective obligations under the Ancillary Agreements. |
| (d) | From and after the Closing Date, the Company shall take such reasonable steps and actions, upon Parent’s reasonable request and at Parent’s sole cost and expense, to assist Parent in making any corrective changes of ownership filings and records with all applicable patent, trademark, and copyright offices and domain name registrars and other similar authorities (‘‘Corrective Changes’’) as may be necessary to correct any break or discrepancy in the chain of title for any material registered Tiger Intellectual Property Rights, including executing and delivering any applicable documents to effect any such Corrective Change. From and after the Closing, at Parent’s sole cost and expense, Parent shall be responsible for recording, and upon Parent’s reasonable request, the Company shall cooperate with SpinCo and the Transferred Subsidiaries to record, the assignment of any applicable Tiger Intellectual Property Rights to the applicable Transferred Subsidiary or Subsidiary of Parent. |
| (b) | (i) Without limitation of the obligations of Parent under this Agreement, Parent shall give the Company prompt written notice upon it or any of its Subsidiaries obtaining knowledge of (w) any material breach (or threatened material breach) or default (or any event or circumstance that, with or without notice, lapse of time or both, could reasonably be expected to give rise to any material breach or default) by any party to the Parent Commitment Letter or the Financing Agreements; (x) any actual or threatened withdrawal, repudiation or termination of the Financing by any of the Lenders; (y) any material dispute or disagreement between or among any of the parties to the Parent Commitment Letter or the Financing Agreements relating to, or otherwise potentially affecting, the amount or the availability of the Financing on the Closing Date or satisfaction of the conditions thereunder; and (z) any amendment or modification of, or waiver under, the Parent Commitment Letter or the Financing Agreements. Parent shall give the Company prompt written notice if for any reason it believes in good faith that Parent will not be able to timely obtain all or any portion of the Financing on the terms and in the manner or from the sources contemplated by the Parent Commitment Letter or the Financing |
| (ii) | Notwithstanding anything contained elsewhere in this Section 8.11 or elsewhere in this Agreement, Parent shall have the right (i) to substitute the proceeds of consummated equity offerings or debt offerings or incurrences of debt for all or any portion of the Financing contemplated by the Parent Commitment Letter by reducing commitments under the Parent Commitment Letter by an amount not in excess of such proceeds, provided that (A) to the extent any such equity or debt has a scheduled special or mandatory redemption right, such right is not exercisable prior to the earliest of (x) the Closing Date, (y) the termination of this Agreement and (z) the End Date and (B) the conditions to the use of such proceeds shall be no more restrictive than the conditions precedent to the availability of the Financing set forth in the Parent Commitment Letter, or (ii) to substitute commitments in respect of other financing for all or any portion of the Financing from the same or alternative bona fide third party financing sources, provided that such other financing (A) does not contain conditions precedent to the funding thereof that are less favorable to Parent than the conditions precedent with respect to the Financing set forth in the Parent Commitment Letter, (B) would not reasonably be expected to prevent, impair or materially delay the consummation of the transactions contemplated by this Agreement, the Separation Agreement and the Ancillary Agreements (including not having conditions to the use of such proceeds more restrictive than the conditions set forth in the Parent Commitment) and (C) would not adversely affect the ability of Parent to enforce its rights against other parties to the Parent Commitment Letter or the Financing Agreements (any such financing pursuant to the foregoing clauses (i) and (ii), the ‘‘Parent Financing’’), provided that the proceeds from any such Parent Financing shall be held as unrestricted cash until the earliest of (x) the Closing Date, (y) the termination of this Agreement and (z) the End Date. For purposes of this Section 8.11, it being understood, for the avoidance of doubt, that the Parent Financing may include any offering of securities or incurrence of loans or any combination thereof. |
| (c) | Prior to the Closing, the Company shall (and shall cause its Subsidiaries to) use its reasonable best efforts to provide, and shall use its reasonable best efforts to cause its Representatives to provide, the cooperation reasonably requested by Parent that is necessary, proper or customary in connection with the arrangement and consummation of the Financing or the Parent Financing, as applicable. Such cooperation shall include: |
| (i) | furnishing to Parent, as promptly as practicable following Parent’s request, with such pertinent and customary reasonably available information necessary to syndicate or complete the underwriting or private placement of the Financing or the Parent Financing, as applicable, as may be reasonably requested by Parent regarding the business, operations, financial projections and prospects of the Tiger Business as is customary for investment grade public companies in connection with the arrangement or marketing of financings such as the Financing or the Parent Financing, as applicable; |
| (ii) | furnishing to Parent the Audited Financial Statements and the Interim Financial Statements, as set forth in Section 6.05; |
| (iii) | reasonably assisting Parent in the preparation of pro forma financial statements in accordance with Article 11 of Regulation S-X under the 1933 Act and other financial data and financial information of the Tiger Business and, if applicable, SpinCo necessary to syndicate or complete the underwriting or private placement of the Financing or the Parent Financing, as applicable; |
| (iv) | using reasonable best efforts to (A) obtain from the independent accountants for the Tiger Business customary accountants’ comfort letters (including customary negative assurance comfort, including change period comfort) and consents of accountants to the use of their reports and to be named as an ‘‘Expert’’ in any materials relating to the Financing or the Parent Financing, as applicable, and (B) cause the independent accountants for the Tiger Business to provide customary assistance and cooperation in the Financing or the Parent Financing, as applicable, including using reasonable best efforts to cause such accountants to participate in a reasonable number of drafting sessions and accounting due diligence sessions; |
| (v) | participating in a reasonable number of meetings (including one-on-one meetings with the parties acting as lead arrangers, bookrunners, underwriters or agents for, and prospective lenders and purchasers of, the Financing or the Parent Financing, as applicable, and senior management and Representatives, with appropriate seniority and expertise, of the Company, SpinCo and their respective Subsidiaries), presentations, road shows, due diligence sessions, drafting sessions and sessions with rating agencies in connection with the Financing or the Parent Financing, as applicable, at times and dates reasonably acceptable to the Company, SpinCo and their respective Subsidiaries; |
| (vi) | reasonably assisting with the preparation of customary offering documents (including assistance in creating usual and customary ‘‘public versions’’ of the foregoing), including confidential information memoranda, private placement memoranda and offering memoranda, and materials for rating agency presentations, lender and investor presentations, bank syndication materials, roadshow presentations and similar documents required in connection with the Financing or the Parent Financing, as applicable, by providing information about the Tiger Business reasonably available to the Company, SpinCo and their respective Subsidiaries; |
| (vii) | taking customary corporate actions, subject to the occurrence of the Effective Time, reasonably requested by Parent that are necessary to authorize and permit the consummation of the Financing or the Parent Financing, as applicable; |
| (viii) | providing such customary assistance with the preparation of any credit or loan agreements, purchase agreements, indentures, and other related definitive financing documents as may be reasonably requested and facilitating in the provision of guarantees and collateral of SpinCo and the Transferred Subsidiaries, in each case, related to the Financing or the Parent Financing, as applicable, and obtaining releases of existing Liens, in each case to be effective no earlier than the Effective Time; |
| (ix) | [reserved]; |
| (x) | cooperating with the Lender Related Parties’ due diligence, to the extent reasonable; |
| (xi) | as soon as practicable, furnishing written notice to Parent if any of the Company, SpinCo or their respective Subsidiaries shall have knowledge of (A) any facts as a result of which a restatement of any of the Audited Financial Statements or the Interim Financial Statements for such financial statements to comply with GAAP is probable or (B) independent accountants for SpinCo or the Tiger Business withdrawing any audit opinion with respect to the Audited Financial Statements; and |
| (xii) | providing within five Business Days after any request therefor from Parent, all documentation and other information about SpinCo and the Tiger Business required by applicable ‘‘know your customer’’ and anti-money laundering rules and regulations including the USA PATRIOT Act to the extent reasonably requested at least 10 Business Days prior to the anticipated closing of the Financing or the Parent Financing, as applicable. |
| (d) | All non-public or otherwise confidential information regarding the Tiger Business obtained by Parent or its Representatives pursuant to this Section 8.11 shall be kept confidential in accordance with the terms of the Confidentiality Agreement. Any Lender Related Parties who receive non-public or otherwise confidential information as provided in the first sentence of this Section 8.11(d) will be deemed to be Representatives of Parent for purpose of the obligations in such sentence. Notwithstanding any other provision set forth herein, in the Confidentiality Agreement or in any other agreement between the Company and Parent (or their respective Affiliates), the Company agrees that Parent may share information with respect to SpinCo, the Transferred Subsidiaries and the Tiger Business with the Lender Related Parties, and that (i) Parent and such Lender Related Parties may share such information (A) with potential financing sources in connection with any marketing efforts for the Financing or the Parent Financing, as applicable; provided, however, that the recipients of such information and any other information contemplated to be provided by Parent or any of its Subsidiaries pursuant to this Section 8.11, agree to customary confidentiality arrangements, including ‘‘click through’’ confidentiality agreements and confidentially provisions contained in customary bank books and offering memoranda, or (B) insofar as is necessary to comply with all applicable disclosure laws and regulations in connection with any offering of securities, and (ii) such Lender Related Parties may disclose such information in accordance with the confidentiality provisions set forth in the Parent |
| (e) | Parent shall, and shall cause its Subsidiaries to, (i) promptly upon request by the Company, reimburse the Company and its Subsidiaries for all reasonable and documented out-of-pocket costs and expenses (including attorneys’ fees) incurred by the Company or any of its Subsidiaries in connection with cooperation provided for in this Section 8.11 and (ii) promptly indemnify and hold harmless the Company, its Subsidiaries and its and their respective Representatives from and against any and all liabilities, claims, losses, damages, costs, expenses, interest, awards, judgments and penalties (including reasonable and documented attorneys’ fees and expenses) actually suffered or incurred by them in connection with the arrangement or consummation of the Financing or the Parent Financing, as applicable, except to the extent any such liabilities, claims, losses, damages, costs, expenses, interest, awards, judgments or penalties arise out of or result from fraud or willful misconduct by any of the Company, its Subsidiaries or their respective Representatives, as determined by a final, non-appealable judgment of a court of competent jurisdiction. |
| (f) | Parent shall, and shall cause its Subsidiaries to, reasonably cooperate with the Company in connection with the preparation of all documents and the making of all filings required in connection with the Exchange Offer, including by taking all such other actions as are required of the Company pursuant to Section 8.11(c), which shall, together with Section 8.11(d), apply mutatis mutandis with respect to the cooperation by Parent and its Subsidiaries in connection with the Exchange Offer by the Company. |
| (g) | Notwithstanding anything to the contrary in this Agreement, the condition set forth in Section 9.02(a)(i), as it applies to the Company’s and SpinCo’s obligations under this Section 8.11, shall be deemed satisfied unless there has been a willful and material breach by the Company or SpinCo of its obligations under this Section 8.11 and such willful and material breach has been the primary cause of the Financing or Parent Financing not being obtained. |
| (a) | the Internal Reorganization, the Direct Sale and the Distribution shall have been consummated in all material respects in accordance with the Separation Agreement; |
| (b) | each Registration Statement, to the extent required, shall have been declared effective by the SEC under the 1933 Act or have become effective under the 1934 Act, as applicable, and no stop order suspending the effectiveness of either Registration Statement shall have been issued by the SEC and no litigation, suit, proceeding or action for such purpose shall be pending before the SEC; |
| (c) | the shares of Parent Common Stock to be issued in the Merger shall have been approved for listing on the New York Stock Exchange, subject to official notice of issuance; |
| (d) | the Parent Stockholder Approval shall have been obtained; |
| (e) | any applicable waiting period under the HSR Act relating to the Merger shall have expired or been terminated; |
| (f) | all material actions by, consents or approvals of, or in respect of or filings with any Governmental Authority required to permit the consummation of the Closing shall have been taken, made or obtained, including the governmental authorizations set forth in Section 9.01(f) of the SpinCo Disclosure Schedule, and shall be in full force and effect; and |
| (g) | no court of competent jurisdiction or other Governmental Authority shall have enacted or issued any Applicable Law that is still in effect restraining, enjoining or prohibiting the Internal Reorganization, the Direct Sale, the Distribution or the Merger. |
| (a) | (i) each of the Company and SpinCo shall have performed in all material respects all of its obligations hereunder required to be performed by it prior to the Effective Time, (ii) (A) the representations and warranties contained in Section 4.01(a), Section 4.02, Section 4.05 and Section 4.21 (disregarding all materiality, Tiger Material Adverse Effect and similar qualifications contained therein) shall be true in all material respects at and as of the Effective Time as if made at and as of such time (other than such representations and warranties that by their terms address matters only as of another specified time, which shall be true in all material respects only as of such time) and (B) the other representations and warranties in Article 4 (disregarding all materiality, Tiger Material Adverse Effect and similar qualifications contained therein) shall be true at and as of the Effective Time as if made at and as of such time (other than representations and warranties that by their terms address matters only as of another specified time, which shall be true only as of such time), with, in the case of this clause (B) only, only such exceptions as have not had and would not reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect; and (iii) Parent shall have received a certificate signed by an executive officer of the Company to the foregoing effect; |
| (b) | Parent shall have received (i) the Parent Merger Tax Opinion from Parent Tax Counsel or an Alternative Tax Counsel, which opinion shall not have been withdrawn or modified in any material respect, and (ii) copies of the Company RMT Tax Opinions; |
| (c) | The Company and SpinCo (or a Subsidiary thereof) shall have entered into each applicable Ancillary Agreement and each such agreement shall be in full force and effect; |
| (d) | since the date of this Agreement, there shall not have occurred any event, change, effect, development or occurrence that has had or would reasonably be expected to have, individually or in the aggregate, a Tiger Material Adverse Effect; and |
| (e) | (i) The Company shall have delivered to Parent the Initial Audited Financial Statements and (ii) the Initial Audited Financial Statements shall not differ from the applicable Tiger Unaudited Financial Statements in a manner that is material to the intrinsic value (determined in a manner consistent with appropriate valuation methodologies) of the Tiger Business in a manner that is adverse (excluding any differences resulting from (x) any changes in the amount of goodwill or intangible assets and (y) the matters described on Section 9.02(e) of the SpinCo Disclosure Schedule); provided that Parent shall be deemed to have irrevocably waived the condition set forth in this Section 9.02(e) if it does not exercise its right to terminate this Agreement pursuant to Section 10.01(c)(ii) within 20 Business Days following the Company’s delivery of the Initial Audited Financial Statements. |
| (a) | (i) each of Parent and Merger Sub shall have performed in all material respects all of its obligations hereunder required to be performed by it prior to the Effective Time, (ii) (A) the representations and warranties contained in Section 5.01(a), Section 5.02, Section 5.05, Section 5.22 and Section 5.24 (disregarding all materiality, Parent Material Adverse Effect and similar qualifications contained therein) shall be true in all material respects at and as of the Effective Time as if made at and as of such time (other than such representations and warranties that by their terms address matters only as of another specified time, which shall be true in all material respects only as of such time) and (B) the other representations and warranties of Parent and Merger Sub contained in this Agreement (disregarding all materiality, Parent Material Adverse Effect and similar qualifications contained therein) shall be true at and as of the Effective Time as if made at and as of such time (other than representations and warranties that by their terms address matters only as of another specified time, which shall be true only as of such time), with, in the case of this clause (B) only, only such exceptions as have not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect; and (iii) the Company shall have received a certificate signed by an executive officer of Parent to the foregoing effect; |
| (b) | The Company shall have received (i) (x) the Company Merger Tax Opinion from Company Tax Counsel or an Alternative Tax Counsel and (y) the Company Separation Tax Opinion from Company Tax Counsel or, in the event that Company Tax Counsel is unable or unwilling to provide the Company Separation Tax Opinion (in which case, the Company shall so inform Parent in writing), an Alternative Separation Opinion Tax Counsel (the ‘‘Company Separation Tax Opinion Condition’’), in each case, which shall not have been withdrawn or modified in any material respect, and (ii) a copy of the Parent Merger Tax Opinion; |
| (c) | Parent (or a Subsidiary thereof) shall have entered into each applicable Ancillary Agreement and each such agreement shall be in full force and effect; |
| (d) | since the date of this Agreement, there shall not have occurred any event, change, effect, development or occurrence that has had or would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect; and |
| (e) | the Direct Sale Purchase Price shall have been received by the Company. |
| (a) | by mutual written agreement of the Company and Parent; |
| (b) | by either the Company or Parent, if: |
| (i) | the Merger has not been consummated on or before the one-year anniversary of the date of this Agreement (as it may be extended in accordance with this Section 10.01(b)(i), the ‘‘End Date’’); provided that the right to terminate this Agreement pursuant to this Section 10.01(b)(i) shall not be available to (i) any party whose breach of any provision of this Agreement results in the failure of the Closing to have occurred by such time or (ii) Parent at a time when the Company is permitted to terminate this Agreement pursuant to Section 10.01(d)(iv); provided, further, that if, as of three Business Days prior to the End Date, one or more of the conditions to the Closing set forth in Section 9.01(e), Section 9.01(f) or Section 9.01(g) (if the Applicable Law relates to any of the matters referenced in Section 9.01(e) or Section 9.01(f)) shall not have been satisfied, but all other conditions to the Closing (other than (i) Section 9.01(a) and Section 9.03(e) and (ii) those conditions which by their terms or nature are to be satisfied at the Closing; provided that any conditions not so satisfied are capable of being satisfied promptly if the Closing were to occur) have been satisfied, then the End Date shall be extended to the 15-month anniversary of the date of this Agreement, if either the Company or Parent notifies the other party in writing on or prior to the one-year anniversary of the date of this Agreement of its election to so extend the End Date; |
| (ii) | any Governmental Authority shall have issued any order, decree or judgment permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement or the Separation Agreement, and such order, decree or judgment shall have become final and nonappealable; provided that the right to terminate this Agreement pursuant to this Section 10.01(b)(ii) shall not be available to any party whose breach of any provision of this Agreement results in the imposition of any such order, decree or judgment; or |
| (iii) | at the Parent Stockholder Meeting (including any adjournment or postponement thereof), the Parent Stockholder Approval shall not have been obtained; provided that the right to terminate this Agreement pursuant to this Section 10.01(b)(iii) shall not be available to Parent unless Parent has complied with all of its obligations under Section 7.03 in all material respects; |
| (c) | by Parent, if: |
| (i) | a breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Company or SpinCo set forth in this Agreement shall have occurred that would cause the condition set forth in Section 9.02(a) not to be satisfied, and such breach or failure to perform (A) is incapable of being cured by the End Date or (B) has not been cured by the |
| (ii) | the condition set forth in Section 9.02(e)(ii) is not satisfied upon the delivery to Parent of the Initial Audited Financial Statements, and Parent exercises its right of termination under this Section 10.01(c)(ii) within 20 Business Days of such delivery; or |
| (d) | by the Company, if: |
| (i) | an Adverse Recommendation Change shall have occurred, or at any time after receipt or public announcement of an Acquisition Proposal, the Parent Board shall have failed to reaffirm the Parent Board Recommendation as promptly as reasonably practicable (but in any event within five Business Days) after receipt of any written request to do so from the Company; |
| (ii) | there shall have been a breach of Section 7.03, Section 7.04 or Section 8.02(b) (in each case except for de minimis breaches that are promptly cured, if such breach is curable); |
| (iii) | a breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Parent or Merger Sub set forth in this Agreement shall have occurred that would cause the condition set forth in Section 9.03(a) not to be satisfied, and such breach or failure to perform (A) is incapable of being cured by the End Date or (B) has not been cured by Parent or Merger Sub within 45 days following written notice to Parent from the Company of such breach or failure to perform (which notice must reference this Section 10.01(d)(iii)); provided that neither the Company nor SpinCo is then in breach of this Agreement so as to cause any of the conditions set forth in Section 9.01 or Section 9.02 not to be satisfied; |
| (iv) | all of the conditions set forth in Section 9.01 and Section 9.02 have been satisfied (other than (i) Section 9.01(a) and (ii) those conditions which by their terms or nature are to be satisfied at the Closing; provided that any conditions not so satisfied are capable of being satisfied promptly if the Closing were to occur), the Company has given written notice to Parent that it is prepared to consummate the Internal Reorganization, the Distribution and the Closing if the Direct Sale occurs and the Direct Sale does not occur within two Business Days of such written notice as a result of Direct Sale Purchaser’s failure to pay the Direct Sale Purchase Price; provided that during such two Business Day period, Parent shall not be permitted to terminate this Agreement pursuant to Section 10.01(b)(i); or |
| (v) | if (A) any Governmental Authority shall have issued any order, decree or judgment in respect of the matters referenced in Section 9.01(e) or Section 9.01(f) restraining, enjoining or otherwise prohibiting any of the transactions contemplated by this Agreement or the Separation Agreement which order, decree or judgment shall not have become final and non-appealable and (B) within 30 days of such order, decree or judgment first being in effect, Parent shall not have instituted appropriate proceedings seeking, or thereafter shall not be using reasonable best efforts, to have such order, decree or judgment vacated, lifted, reversed, overturned or terminated. |
| (b) | If (i) this Agreement is terminated (x) by Parent or the Company pursuant to Section 10.01(b)(i) (if the Parent Stockholder Approval has not theretofore been obtained) or Section 10.01(b)(iii) or (y) by the Company pursuant to Section 10.01(d)(iii), (ii) prior to such termination, an Acquisition Proposal shall have been publicly announced or otherwise been communicated to the Parent Board, the management of Parent or the stockholders of Parent and (iii) within 12 months following the date of such termination, Parent shall have entered into a definitive agreement with respect to, or recommended to its stockholders, any Acquisition Proposal or any Acquisition Proposal shall have been consummated (provided that for purposes of this clause (iii), each reference to ‘‘20%’’ in the definition of Acquisition Proposal shall be deemed to be a reference to ‘‘50%’’), then Parent shall pay to the Company in immediately available funds, concurrently with the occurrence of the applicable event described in clause (iii), the Termination Fee less the amount of any Expenses reimbursed by Parent pursuant to Section 10.03(d). |
| (c) | If this Agreement is terminated pursuant to (x) Section 10.01(b)(i) or Section 10.01(b)(ii) (in the case of Section 10.01(b)(ii), solely in respect of any order, decree or judgment in respect of the matters referenced in Section 9.01(e) or Section 9.01(f)) and, at the time of such termination, one or more of the conditions to the Closing set forth in Section 9.01(e), Section 9.01(f) or Section 9.01(g) (if the Applicable Law relates to any of the matters referenced in Section 9.01(e) or Section 9.01(f)) shall not have been satisfied, but all conditions to the Closing set forth in Section 9.02 (other than those conditions which by their terms or nature are to be satisfied at the Closing; provided that any conditions not so satisfied are capable of being satisfied promptly if the Closing were to occur) have been satisfied or waived, (y) Section 10.01(d)(iii) (in respect of a breach of Section 8.01 in connection with efforts to obtain antitrust approvals) or (z) Section 10.01(d)(v), then Parent shall pay to the Company in immediately available funds the Termination Fee within one Business Day after such termination. |
| (d) | If this Agreement is terminated pursuant to Section 10.01(b)(iii), Parent shall reimburse the Company and SpinCo and their respective Affiliates (by wire transfer of immediately available funds), no later than two Business Days after submission of written documentation therefor, for 100% of their Expenses, up to an aggregate maximum reimbursement of $40 million. |
| (e) | Except as otherwise specifically provided herein (including in Section 8.11(e) and this Section 10.03), all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. |
| (f) | The parties hereby acknowledge and agree that: (i) the agreements contained in this Section 10.03 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, the parties would not enter into this Agreement; and (ii) any Termination Fee payable to the Company by Parent pursuant to Section 10.03(a), Section 10.03(b) or Section 10.03(c) is not a penalty, but is liquidated damages in an amount that shall compensate the Company for the efforts and resources expended and the opportunities foregone while negotiating this Agreement and in reliance upon this Agreement and on the expectation of the consummation of the transactions contemplated herein, and for the liability suffered by reason of the failure of such consummation, which amount would otherwise be uncertain and incapable of accurate determination. If Parent fails to pay any amount due to the Company pursuant to this Section 10.03 by the date required hereby, it shall also pay any costs and expenses reasonably incurred by the Company or SpinCo in connection with a legal action to enforce this Agreement that results in a judgment against Parent, together with interest on the amount of any unpaid fee, cost or expense at the publicly announced prime rate of Citibank, N.A. from the date such fee, cost or expense was required to be paid to (but excluding) the payment date. |
| (g) | The parties acknowledge and agree that in no event shall Parent be required to pay more than one Termination Fee. |
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Westinghouse Air Brake Technologies Corporation
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1001 Air Brake Avenue
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Wilmerding, Pennsylvania
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Attention:
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David L. DeNinno
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Facsimile No.:
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(412) 825-1305
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E-mail:
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ddeninno@wabtec.com
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Jones Day
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250 Vesey Street
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New York, New York 10281
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Attention:
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Robert A. Profusek
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Peter E. Izanec
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Facsimile No.:
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(212) 755-7306
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E-mail:
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raprofusek@jonesday.com
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peizanec@jonesday.com
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General Electric Company
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33-41 Farnsworth Street
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Boston, MA 02210
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Attention: James M. Waterbury
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Facsimile No.: +44 2073026834
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E-mail: jim.waterbury@ge.com
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Davis Polk & Wardwell LLP
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450 Lexington Avenue
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New York, New York 10017
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Attention:
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William L. Taylor
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Lee Hochbaum
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Facsimile No.:
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(212) 701-5800
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E-mail:
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william.taylor@davispolk.com
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lee.hochbaum@davispolk.com
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| (b) | No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Applicable Law. |
| (b) | No party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party hereto. |
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GENERAL ELECTRIC COMPANY
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By:
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/s/ Aris Kekedjian
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Name:
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Aris Kekedjian
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Title:
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Vice President
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TRANSPORTATION SYSTEMS HOLDINGS INC.
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By:
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Name:
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Title:
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GENERAL ELECTRIC COMPANY
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By:
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Name:
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Title:
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TRANSPORTATION SYSTEMS HOLDINGS INC.
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By:
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/s/ William John Godsman
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Name:
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William John Godsman
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Title:
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Vice President
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WESTINGHOUSE AIR BRAKE
TECHNOLOGIES CORPORATION |
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By:
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/s/ Albert J. Neupaver
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Name:
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Albert J. Neupaver
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Title:
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Executive Chairman
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WABTEC US RAIL HOLDINGS, INC.
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By:
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/s/ Scott E. Wahlstrom
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Name:
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Scott E. Wahlstrom
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Title:
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Vice President
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Page
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ARTICLE 1
DEFINITIONS AND INTERPRETATION |
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Section 1.01.
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General
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B-2
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Section 1.02.
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Other Definitional and Interpretative Provisions
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B-16
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ARTICLE 2
THE DIRECT SALE AND SEPARATION |
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Section 2.01.
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Restructuring; Direct Sale
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B-16
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Section 2.02.
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Transfer of Assets; Assumption of Liabilities
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B-17
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Section 2.03.
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Intercompany Accounts, Intercompany Agreements and Certain Other Liabilities
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B-19
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|
Section 2.04.
|
Limitation of Liability
|
B-19
|
|
Section 2.05.
|
Consents
|
B-19
|
|
Section 2.06.
|
Disclaimer of Representations and Warranties
|
B-21
|
|
Section 2.07.
|
Cash Management
|
B-22
|
|
Section 2.08.
|
Insurance
|
B-22
|
|
Section 2.09.
|
Ancillary Agreements
|
B-23
|
|
Section 2.10.
|
SpinCo Cash, Indebtedness and Receivables Adjustment
|
B-23
|
|
Section 2.11.
|
Direct Sale Cash and Indebtedness Adjustment
|
B-25
|
|
Section 2.12.
|
Issuance of SpinCo Common Stock
|
B-27
|
|
Section 2.13.
|
Amendments to the Step Plan
|
B-27
|
|
Section 2.14.
|
FIRPTA
|
B-27
|
|
ARTICLE 3
THE DISTRIBUTION |
||
|
Section 3.01.
|
Form of Distribution
|
B-27
|
|
Section 3.02.
|
Manner of Effecting Distribution
|
B-28
|
|
Section 3.03.
|
Conditions to Distribution
|
B-28
|
|
Section 3.04.
|
Additional Matters in Connection with the Distribution
|
B-29
|
|
ARTICLE 4
CERTAIN COVENANTS |
||
|
Section 4.01.
|
Further Assurances
|
B-29
|
|
Section 4.02.
|
Company Names and Marks
|
B-29
|
|
Section 4.03.
|
Further Action Regarding Intellectual Property Rights
|
B-30
|
|
Section 4.04.
|
Third Party Licenses
|
B-31
|
|
Section 4.05.
|
Third Party Consents
|
B-31
|
|
Section 4.06.
|
Factored Receivables
|
B-31
|
|
Section 4.07.
|
Interim Period Agreements
|
B-31
|
|
Page
|
||
|
ARTICLE 5
INDEMNIFICATION |
||
|
Section 5.01.
|
Release of Pre-Distribution Claims
|
B-32
|
|
Section 5.02.
|
Indemnification by the Company
|
B-33
|
|
Section 5.03.
|
Indemnification by Parent
|
B-33
|
|
Section 5.04.
|
Procedures for Indemnification
|
B-33
|
|
Section 5.05.
|
Indemnification Obligations Net of Insurance Proceeds and Other Amounts
|
B-35
|
|
Section 5.06.
|
Contribution
|
B-35
|
|
Section 5.07.
|
Additional Matters; Survival of Indemnities
|
B-36
|
|
ARTICLE 6
PRESERVATION OF RECORDS; ACCESS TO INFORMATION; CONFIDENTIALITY; PRIVILEGE |
||
|
Section 6.01.
|
Access Generally
|
B-37
|
|
Section 6.02.
|
Financial Statements and Accounting
|
B-37
|
|
Section 6.03.
|
Witness Services
|
B-37
|
|
Section 6.04.
|
Reimbursement
|
B-38
|
|
Section 6.05.
|
Retention of Books and Records
|
B-38
|
|
Section 6.06.
|
Confidentiality
|
B-38
|
|
Section 6.07.
|
Privilege Matters
|
B-39
|
|
Section 6.08.
|
Ownership of Information
|
B-40
|
|
Section 6.09.
|
Other Agreements
|
B-40
|
|
ARTICLE 7
MISCELLANEOUS |
||
|
Section 7.01.
|
Complete Agreement
|
B-40
|
|
Section 7.02.
|
Counterparts
|
B-40
|
|
Section 7.03.
|
Survival of Covenants
|
B-40
|
|
Section 7.04.
|
Expenses
|
B-40
|
|
Section 7.05.
|
Notices
|
B-40
|
|
Section 7.06.
|
Amendment and Waivers
|
B-41
|
|
Section 7.07.
|
Termination
|
B-42
|
|
Section 7.08.
|
Assignment
|
B-42
|
|
Section 7.09.
|
Successors and Assigns
|
B-42
|
|
Section 7.10.
|
Subsidiaries
|
B-42
|
|
Section 7.11.
|
Third-Party Beneficiaries
|
B-42
|
|
Section 7.12.
|
Governing Law; Jurisdiction
|
B-42
|
|
Section 7.13.
|
Waiver of Jury Trial
|
B-43
|
|
Section 7.14.
|
Specific Performance
|
B-43
|
|
Section 7.15.
|
Severability
|
B-43
|
|
Section 7.16.
|
No Admission of Liability
|
B-43
|
|
Section 7.17.
|
Non-Applicability to Taxes and Employee Matters
|
B-43
|
|
Section 7.18.
|
No Recourse to Lender Related Parties
|
B-43
|
|
EXHIBITS
|
|
|
Exhibit A
|
Form of Employee Matters Agreement
|
|
Exhibit B
|
Form of IP Cross License Agreement
|
|
Exhibit C
|
Form of Trademark License Agreement
|
|
Exhibit D
|
Form of Transition Services Agreement
|
|
Exhibit E
|
Form of Tax Matters Agreement
|
|
Exhibit F
|
Form of R&D Agreement
|
|
Exhibit G
|
Form of India R&D Agreement
|
|
Exhibit H
|
Co-Location Term Sheet
|
|
Exhibit I
|
Digital Term Sheet
|
|
ANNEXES
|
|
|
Annex A
|
Tiger Assets
|
|
Annex B
|
Excluded Assets
|
|
Annex C
|
Tiger Liabilities
|
|
Annex D
|
Excluded Liabilities
|
| (i) | subject to Section 2.07, cash and cash equivalents, other than cash and cash equivalents counted in determining the Final Direct Sale Closing Cash and Restricted Cash held by any member of the Tiger Group as of the Distribution Effective Time; |
| (ii) | all rights to the Company Names and Marks, together with any Contracts granting rights to use the same; |
| (iii) | except as set forth on Annex A-1 or Annex A-2, all of the Company Group’s or Tiger Group’s right, title and interest in owned and leased real property and other interests in real property including all such right, title and interest under each real property lease pursuant to which any of them leases, subleases (as sub-landlord or sub-tenant) or otherwise occupies any such leased real property, including all buildings, structures, improvements, fixtures and appurtenances thereto and rights in respect thereof; |
| (iv) | other than any loans or advances between or among the Company and its Subsidiaries on behalf of the Tiger Business (and not any Company Business), all loans or advances among the Company and any of its Subsidiaries (including, for the avoidance of doubt, advances made in connection with the Trade Payables Program); |
| (v) | any work papers of the Company’s auditors and any other Tax records (including accounting records) of any member of the Company Group (subject to Section 6.01), provided, however, that SpinCo shall in all events be entitled to copies of, and shall be entitled to use, any such books and records to the extent solely related to the Tiger Business, SpinCo or any Direct Sale Transferred Subsidiary; |
| (vi) | the Employee Plans, except to the extent expressly Transferred to, or retained by, the Tiger Group in the Employee Matters Agreement; |
| (vii) | without limiting SpinCo’s rights expressly provided under Section 2.08, all Insurance Policies of the Company or any of its Subsidiaries, and all rights of any nature with respect to any Insurance Policy, including any recoveries thereunder and any rights to assert claims seeking any such recoveries; |
| (viii) | for the avoidance of doubt, any Assets held on the date hereof, or acquired after the date hereof, and sold or otherwise disposed of prior to the Distribution Effective Time; |
| (ix) | all rights, claims, causes of action (including counterclaims and rights of set-off) and defenses against Third Parties to the extent relating to any of the Excluded Assets or the Excluded Liabilities as well as any books, records and Privileged Information relating thereto; |
| (x) | except as expressly contemplated pursuant to the Ancillary Agreements, all Company Intellectual Property, Company Software and Company Data/Technology; |
| (xi) | all Assets expressly retained by or Transferred to the Company Group pursuant to the Employee Matters Agreement; |
| (xii) | any Permits, including Environmental Permits, held by any member of the Company Group that are not Related to the Business; |
| (xiii) | all interests of any member of the Company Group under the Transaction Agreements and the Confidentiality Agreement; |
| (xiv) | all personnel and employment records for employees and former employees of any member of the Company Group or the Tiger Group who are not Continuing Employees, except to the extent necessary for the Tiger Group to meet its obligations pursuant to this Agreement or the Employee Matters Agreement; |
| (xv) | any other Assets of any member of the Company Group or the Tiger Group to the extent not Related to the Business, except (x) Tiger Intellectual Property, Tiger Software and Tiger Data/Technology and (y) Assets expressly to be retained by or Transferred to the Tiger Group pursuant to the Employee Matters Agreement; |
| (xvi) | other than (A) any accounts receivable exclusively between or among the Company and its Subsidiaries on behalf of the Tiger Business (and not any Company Business) and (B) any Surviving Intercompany Accounts, any intercompany accounts receivable owing from the Company or any of its Affiliates; |
| (xvii) | (A) all corporate minute books (and other similar corporate records) and stock records of any member of the Company Group, (B) any books and records relating to the Excluded Assets, (C) any books and records or other materials of or in the possession of any member of the Company Group or the Tiger Group that (x) any of the members of the Company Group are required by Applicable Law to retain, (y) any of the members of the Company Group reasonably believes are necessary to enable the Company Group to prepare and/or file Tax Returns, or (z) any member of the Company Group is prohibited by Applicable Law from delivering to the Tiger Group or Parent (including by Transfer of equity of any member of the Tiger Group), including any books and records, reports, information or other materials that disclose in any manner the contents of any other books and records, reports, information or other materials that any member of the Company Group is prohibited by Applicable Law from delivering to the Tiger Group or Parent (including by Transfer of equity of any member of the Tiger Group) or (D) any copies of any books and records that any member of the Company Group retains pursuant to Section 6.05; |
| (xviii) | (A) all records and reports prepared or received by the Company or any of its Subsidiaries in connection with the disposition of the Tiger Business or the transactions contemplated hereby, including all analyses relating to the Tiger Business or Parent so prepared or received, (B) all confidentiality agreements with prospective purchasers of the Tiger Business or any portion thereof (other than to the extent set forth in clause (xv) of the definition of ‘‘Tiger Assets’’), and all bids and expressions of interest received from Third Parties with respect to the Tiger Business, and (C) all Privileged materials, documents and records that are not Related to the Business; |
| (xix) | the Factored Customer Receivables; and |
| (xx) | the Assets listed on Annex B-20. |
| (i) | any Liability to the extent relating to any Excluded Asset; |
| (ii) | any Liability expressly retained by, or Transferred to, the Company Group pursuant to the Employee Matters Agreement or the Tax Matters Agreement; |
| (iii) | other than (A) intercompany accounts payable exclusively between or among the Company and its Subsidiaries on behalf of the Tiger Business (and not any Company Business) and (B) Surviving Intercompany Accounts, any Liability for any intercompany accounts payable to the Company or any of its Affiliates, which intercompany accounts payable shall (subject to the foregoing exceptions) be extinguished at Closing; |
| (iv) | all Liabilities, whether presently in existence or arising after the date of the Agreement, relating to fees, commissions or expenses owed to any broker, finder, investment banker, accountant, attorney or other intermediary or advisor employed by members of the Company Group or, to the extent the relevant engagement was entered into prior to the Closing, members of the Tiger Group in connection with the transactions contemplated by this Agreement or the Transaction Agreements (other than, for the avoidance of doubt, to the extent otherwise provided in the Merger Agreement or any Ancillary Agreement); |
| (v) | all Liabilities to the extent relating to: |
| (A) | the conduct and operation of the Company Business (including, to the extent relating to the Company Business, any Liability relating to, arising out of or resulting from any act or failure to act by any directors, officers, partners, managers, employees or agents of any member of the Company Group (whether or not such act or failure to act is or was within such Person’s authority)); or |
| (B) | any warranty, product liability obligation or claim or similar obligation entered into, created or incurred in the course of the Company Business with respect to its products or services, whether prior to, at or after the Distribution Effective Time; |
| (vi) | all Liabilities to the extent arising under the allocated portion of any Shared Contract that is assigned to a member of the Company Group in accordance with Section 2.05(c); |
| (vii) | all Liabilities of any member of the Company Group under the Transaction Agreements; and |
| (viii) | all fines or penalties imposed by any Governmental Authority relating to the matter set forth on Annex D-8 to the extent relating to filings made by the Company prior to the Distribution Effective Time. |
| (i) | all Tiger Owned Real Property, together with all buildings, structures, improvements, fixtures and appurtenances thereto and rights in respect thereof Related to the Business; |
| (ii) | all Tiger Leased Real Property; |
| (iii) | all rights of the Company or its applicable Subsidiary under (A) other than with respect to Intellectual Property Rights, Software and Technology, Contracts Related to the Business (including (x) the real property leases in respect of the Tiger Leased Real Property and (y) any Contract entered into in the name of, or expressly on behalf of, the Tiger Business), except as required by Applicable Law in the case of Contracts relating to labor and employment, and (B) those Intellectual Property Rights, Software and Technology licenses from Third Parties listed on Annex A-3; |
| (iv) | all accounts and other receivables to the extent related to the Tiger Business, other than Factored Customer Receivables; |
| (v) | all expenses to the extent related to the Tiger Business that have been prepaid by the Company or any of its Subsidiaries, including lease and rental payments to the extent related to the Tiger Business; |
| (vi) | all rights, claims, credits, causes of action (including counter-claims and rights of set-off) against Third Parties to the extent related to the Tiger Business, including unliquidated rights under manufacturing and vendors’ warranties to the extent related to the Tiger Business; |
| (vii) | all Tiger Intellectual Property, Tiger Software and Tiger Data/Technology; |
| (viii) | all Permits, including Environmental Permits, that are Related to the Business; |
| (ix) | the Tiger Books and Records; |
| (x) | all Assets expressly to be retained by or Transferred to the Tiger Group pursuant to the Employee Matters Agreement; |
| (xi) | all personal property and interests therein, including furniture, furnishings, office equipment, communications equipment, vehicles, and other tangible personal property, in each case Related to the Business (including, in each case, rights, if any, in any of the foregoing purchased subject to any conditional sales or title retention agreement in favor of any other Person); |
| (xii) | all Assets listed on Annex A-12; |
| (xiii) | the shares of common stock or other equity interests in the Subsidiaries of the Company set forth on Annex A-13; |
| (xiv) | the JV Interests; |
| (xv) | the right to enforce the confidentiality or assignment provisions of any confidentiality, non-disclosure or other similar Contracts (including any Contracts with prospective purchasers of the Tiger Business or any portion thereof) to the extent related to confidential information of the Tiger Business; |
| (xvi) | all rights of the Tiger Group under this Agreement or any other Transaction Agreements and the certificates and instruments delivered in connection therewith; |
| (xvii) | all Assets set forth on or reflected in the December 31, 2017 balance sheet included in the Tiger Unaudited Financial Statements (including the notes thereto), as the same may change as a result of the operation of the Tiger Business between the date of such balance sheet and the Distribution Date; |
| (xviii) | Restricted Cash held by any member of the Tiger Group and cash and cash equivalents included in the SpinCo Adjustment Amount; |
| (xix) | Transferred Notes in the amount set forth on Schedule 2.01(a); and |
| (xx) | all other Assets of a type not expressly covered in this definition that are owned by the Company or any of its Subsidiaries and Related to the Business. |
| (i) | all Liabilities set forth on or reflected in the December 31, 2017 balance sheet included in the Tiger Unaudited Financial Statements (including the notes thereto), as the same may change as a result of the operation of the Tiger Business between the date of such balance sheet and the Distribution Date; |
| (ii) | all Liabilities under the Surviving Intercompany Accounts, including Liabilities for advances made under the Trade Payables Program; |
| (iii) | all Liabilities arising under Contracts referred to in clause (iii) of the definition of Tiger Assets; |
| (iv) | all Liabilities to the extent Related to the Business (including all Liabilities with respect to the Tiger Assets), whether accruing before, on or after the Distribution Date (whether direct or indirect, known or unknown, absolute or contingent, asserted or unasserted, accrued or unaccrued, liquidated or unliquidated, matured or unmatured or due or to become due as of the Distribution Date); |
| (v) | all Liabilities, whether accruing before, on or after the Distribution Date, (A) (1) under Environmental Laws, including those relating in any way to the environment or natural resources, human health and safety or Hazardous Materials and (2) arising from or relating in any way to the Tiger Assets, the Tiger Business or otherwise to any past, current or future businesses, operations or properties of or associated with the Tiger Assets or the Tiger Business (including any businesses, operations or properties for which a current or future owner or operator of the Tiger Assets or the Tiger Business may be alleged to be responsible as a matter of Applicable Law, contract or otherwise) or (B) relating to the use, application, malfunction, defect, design, operation, performance or suitability of, or actual or alleged presence of Hazardous Materials in, any product or component sold or distributed prior to the Distribution Effective Time by, or service rendered prior to the Distribution Effective Time by or on behalf of, the Company or any of its Subsidiaries (in connection with the Tiger Business or otherwise with any past, current or future businesses, operations or properties of or associated with the Tiger Assets or the Tiger Business) to any Person (including any products or components for which a current or future owner or operator of the Tiger Assets or the Tiger Business may be alleged to be responsible as a matter of Applicable Law, Contract or otherwise); |
| (vi) | all Liabilities expressly Transferred to, or retained by, the Tiger Group pursuant to the Employee Matters Agreement; |
| (vii) | all Liabilities to the extent arising from or related to any Disposed Tiger Business; |
| (viii) | all Liabilities described on Annex C-8; |
| (ix) | any Liability for Taxes expressly Transferred to, or retained by, SpinCo or a SpinCo Designee pursuant to the Tax Matters Agreement; |
| (x) | any warranty, product liability obligation or claim or similar obligation entered into, created or incurred in the course of the Tiger Business with respect to its products or services, whether prior to, at or after the Distribution Effective Time; |
| (xi) | all Liabilities allocated to any member of the Tiger Group under the Transaction Agreements; |
| (xii) | all Liabilities to the extent arising under the allocated portion of any Shared Contract that is assigned to a member of the Tiger Group in accordance with Section 2.05(c); |
| (xiii) | all Liabilities relating to any Transferred Notes; and |
| (xiv) | all Liabilities to the extent related to (A) SpinCo Indebtedness (to the extent taken into account in the determination of Final SpinCo Closing Indebtedness pursuant to Section 2.10), (B) Direct Sale Indebtedness (to the extent taken into account in the determination of Final Direct Sale Closing Indebtedness pursuant to Section 2.11) or (C) the Financing. |
| (b) | Each of the following terms is defined in the Section set forth opposite such term: |
|
Term
|
Section
|
|
Agreed Allocation
|
1.01(a)
|
|
Agreement
|
Preamble
|
|
Board
|
Recitals
|
|
Claiming Party
|
5.04(b)
|
|
Clean-Up Spin-Off
|
Recitals
|
|
Co-Location Term Sheet
|
4.07
|
|
Company
|
Preamble
|
|
Company Claim
|
5.03
|
|
Term
|
Section
|
|
Company Released Persons
|
5.01(a)(ii)
|
|
Definitive Co-Location Agreement
|
4.07
|
|
Definitive Digital Agreement
|
4.07
|
|
Digital Term Sheet
|
4.07
|
|
Direct Claim
|
5.04(a)(ii)
|
|
Direct Sale
|
Recitals
|
|
Direct Sale Deficit Amount
|
2.11(d)
|
|
Direct Sale Dispute Notice
|
2.11(b)
|
|
Direct Sale Increase Amount
|
2.11(d)
|
|
Direct Sale Independent Accounting Firm
|
2.11(c)
|
|
Direct Sale Proposed Statement
|
2.11(a)
|
|
Direct Sale Purchase Price
|
2.01(d)
|
|
Direct Sale Purchaser
|
Preamble
|
|
Direct Sale Unresolved Items
|
2.11(c)
|
|
Distribution
|
Recitals
|
|
Distribution Share Maximum
|
Recitals
|
|
Distribution Share Minimum
|
Recitals
|
|
Exchange Offer
|
Recitals
|
|
Final Direct Sale Closing Cash
|
2.11(c)
|
|
Final Direct Sale Closing Indebtedness
|
2.11(c)
|
|
Final SpinCo Closing Cash
|
2.10(c)
|
|
Final SpinCo Closing Indebtedness
|
2.10(c)
|
|
Final Excess Factored Customer Receivables
|
2.10(c)
|
|
Indemnity Payment
|
5.05(a)
|
|
Lender Provisions
|
7.06(a)
|
|
Merger
|
Recitals
|
|
Merger Agreement
|
Recitals
|
|
Merger Sub
|
Recitals
|
|
New Corporate Names
|
4.02(d)
|
|
One-Step Spin-Off
|
Recitals
|
|
Parent
|
Preamble
|
|
Privilege
|
6.07(a)
|
|
Privileged Information
|
6.07(a)
|
|
Proposed Direct Sale Closing Cash
|
2.11(a)
|
|
Proposed Direct Sale Closing Indebtedness
|
2.11(a)
|
|
Proposed Excess Factored Customer Receivables
|
2.10(a)
|
|
Proposed SpinCo Closing Cash
|
2.10(a)
|
|
Proposed SpinCo Closing Indebtedness
|
2.10(a)
|
|
Separation
|
Recitals
|
|
Single Jurisdiction Direct Sale
|
2.01(d)
|
|
SpinCo
|
Preamble
|
|
SpinCo Claim
|
5.02
|
|
SpinCo Deficit Amount
|
2.10(d)
|
|
SpinCo Dispute Notice
|
2.10(b)
|
|
SpinCo Increase Amount
|
2.10(d)
|
|
SpinCo Independent Accounting Firm
|
2.10(c)
|
|
SpinCo Proposed Statement
|
2.10(a)
|
|
SpinCo Unresolved Items
|
2.10(c)
|
|
Third-Party Claim
|
5.04(b)
|
|
Third-Party Proceeds
|
5.05(a)
|
|
Tiger Docketed IP/Data/Technology
|
4.03(a)
|
|
Tiger Released Persons
|
5.01(a)(i)
|
|
Transfer
|
Recitals
|
|
Unscheduled Registrable IP
|
4.03(a)
|
| (b) | Transfer of Direct Sale Assets. Upon the terms and subject to the conditions set forth in this Agreement, on the Distribution Date (immediately prior to the completion of the transactions contemplated by Section 2.02), the Company shall, and shall cause the applicable members of the Company Group to, Transfer to Direct Sale Purchaser, and Direct Sale Purchaser shall accept, or shall cause one or more of its Subsidiaries to accept, from the Company and the applicable members of the Company Group, all of the Company’s and each such Company Group member’s respective right, title and interest in and to all Direct Sale Assets held by the Company or a member of the Company Group (it being understood that if any Direct Sale Asset shall be held by a Person all of the outstanding equity interests of which is included in the Direct Sale Assets to be Transferred pursuant to this Section 2.01(b), such Direct Sale Asset may be considered to be so Transferred to Direct Sale Purchaser (or its applicable Subsidiary) as a result of the Transfer of all of the equity interests in such Person from the Company or the applicable member(s) of the Company Group to Direct Sale Purchaser (or its applicable Subsidiary)). Parent hereby covenants and agrees that (i) Direct Sale Purchaser shall not be a direct or indirect Subsidiary of Merger Sub and (ii) Merger Sub shall not be a direct or indirect Subsidiary of Direct Sale Purchaser. |
| (c) | Assumption of Direct Sale Liabilities. Upon the terms and subject to the conditions set forth in this Agreement, on the Distribution Date (immediately prior to the completion of the transactions contemplated by Section 2.02), the Company shall, or shall cause another member of the Company Group to, Transfer to Direct Sale Purchaser, and Direct Sale Purchaser shall (or shall cause one or more of its Subsidiaries to) accept, assume and perform, discharge and fulfill, in accordance with their respective terms, all of the Direct Sale Liabilities, in each case regardless of (i) when or where such Liabilities arose or arise, (ii) where or against whom such Liabilities are asserted or determined, (iii) whether such Liabilities arise from or are alleged to arise from negligence, gross negligence, |
| (d) | Direct Sale Purchase Price. The purchase price for the Direct Sale Assets to be purchased hereunder is $2.9 billion (the ‘‘Direct Sale Purchase Price’’). On the Distribution Date, Direct Sale Purchaser shall pay the Direct Sale Purchase Price to the Company or one or more members of the Company Group designated by the Company, by wire transfer of immediately available funds to such bank account or accounts as per written instructions of the Company given to Parent at least two Business Days prior to the Distribution Date. Notwithstanding any provision contained herein to the contrary, each of Parent and Direct Sale Purchaser shall be entitled to deduct and withhold from the consideration otherwise payable to any Person pursuant to this Section 2.01(d) (and any post-Distribution Date payment made with respect to the sale of the Direct Sale Assets, including any payment made pursuant to Section 2.11(d)) such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of Applicable Law. Any such deductions or withholdings with respect to the purchase and sale of a Direct Sale Asset in the Direct Sale in which the member of the Company Group that sold the Direct Sale Asset and the member of the Parent Group that purchased the Direct Sale Asset are both resident for Tax purposes in the same jurisdiction (a ‘‘Single Jurisdiction Direct Sale’’) shall be treated for all purposes of this Agreement as having been paid to the member of the Company Group in respect of which such deduction or withholding was made. With respect to the purchase and sale of any Direct Sale Asset, other than a Single Jurisdiction Direct Sale, in respect of which withholding or deductions are required under Applicable Law, Parent shall cause the applicable member of the Parent Group to pay to the applicable member of the Company Group an additional amount so that the member of the Company Group receives, after such deduction or withholding (including any deduction or withholding on payments required by this sentence) the same amount it would have received had such purchase and sale been a Single Jurisdiction Direct Sale (for the avoidance of doubt, determined by reference to the jurisdiction in which the member of the Company Group is tax resident). In the event that Parent or Direct Sale Purchaser determines that any such deduction or withholding is required, then Parent or Direct Sale Purchaser, as relevant, shall notify the Company as promptly as practicable and work in good faith with the Company to mitigate such deduction or withholding, including by accepting any Tax forms, certifications or other documentation provided by the Company to eliminate or reduce such deduction or withholding if and to the extent consistent with Applicable Law. |
| (i) | Transfer of SpinCo Assets. The Company shall, and shall cause the applicable members of the Company Group to, Transfer to SpinCo or the applicable SpinCo Designees, and SpinCo or such SpinCo Designees shall accept from the Company and the applicable members of the Company Group, all of the Company’s and each such Company Group member’s respective right, title and interest in and to all SpinCo Assets held by the Company or a member of the Company Group (it being understood that if any SpinCo Asset shall be held by a Person all of the outstanding equity interests of which is included in the SpinCo Assets to be Transferred pursuant to this Section 2.02(a)(i), such SpinCo Asset may be considered to be so Transferred to SpinCo or the applicable SpinCo Designee as a result of the Transfer of all of the equity interests in such Person from the Company or the applicable member(s) of the Company Group to SpinCo or the applicable SpinCo Designee). |
| (ii) | Transfer of Excluded Assets. SpinCo shall, and shall cause the applicable members of the SpinCo Group to, Transfer to the Company or the applicable Company Designees, and the Company or such Company Designees shall accept from SpinCo and the applicable members of the SpinCo |
| (iii) | Assumption of Liabilities. (A) The Company shall, or shall cause another member of the Company Group to, Transfer to SpinCo or the applicable SpinCo Designees, and SpinCo shall, or shall cause another member of the SpinCo Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill, in accordance with their respective terms, all of the SpinCo Liabilities and (B) SpinCo shall, or shall cause another member of the SpinCo Group to, Transfer to the Company or the applicable Company Designees, and the Company shall, or shall cause another member of the Company Group to, assume all of the Excluded Liabilities, in each case regardless of (1) when or where such Liabilities arose or arise, (2) where or against whom such Liabilities are asserted or determined, (3) whether such Liabilities arise from or are alleged to arise from negligence, gross negligence, recklessness, violation of Applicable Law, willful misconduct, bad faith, fraud or misrepresentation by any member of the Company Group or the SpinCo Group, as the case may be, or any of their past or present respective directors, officers, employees, or agents, (4) which Person is named in any Action associated with any Liability and (5) whether the facts on which such Liabilities are based occurred prior to, on or after the date hereof. |
| (b) | In the event of any inconsistency or conflict that may arise in the application or interpretation of the definitions of ‘‘Tiger Assets’’, ‘‘Excluded Assets’’, ‘‘Tiger Liabilities’’ and ‘‘Excluded Liabilities’’, (i) the explicit inclusion of an item on any Annex referred to in any such definition shall take priority over any textual provision of either definition that would otherwise operate to include or exclude such Asset or Liability, as the case may be, from the applicable definition and (ii) any specific reference in a given definition will be given priority over a general reference in another definition. |
| (c) | In the event that at any time or from time to time at or after the Distribution Effective Time, any member of the Company Group or the Tiger Group is the owner of, receives or otherwise comes to possess any Asset (including the receipt of payments made pursuant to Contracts and proceeds from accounts receivable) or Liability that is allocated to any Person that is a member of the other Group pursuant to this Agreement or any Ancillary Agreement (except in the case of any acquisition of Assets from the other party for value subsequent to the Distribution Effective Time), such member of the Company Group or the Tiger Group, as applicable, shall promptly Transfer, or cause to be Transferred, such Asset or Liability to the Person so entitled thereto; provided, however, that the provisions of this Section 2.02(c) are not intended to, and shall not, be deemed to constitute an authorization by any party to permit the other to accept service of process on its behalf, and no party is or shall be deemed to be the agent of any other party for service of process purposes. Prior to any such Transfer, such Asset or Liability shall be held in accordance with Section 2.05(b). For the avoidance of doubt, this Section 2.02(c) will apply to the Direct Sale Assets and Direct Sale Liabilities. |
| (d) | In furtherance of the Separation (including the Internal Reorganization) and the Direct Sale, subject to the provisions of Section 2.05, the Company and Parent shall, and shall cause their respective applicable Subsidiaries to, execute and deliver prior to the Distribution Effective Time all Conveyance and Assumption Instruments as may be necessary to effect the Internal Reorganization and the Transfers of the SpinCo Assets, the SpinCo Liabilities, the Direct Sale Assets, the Direct Sale Liabilities, the Excluded Assets and the Excluded Liabilities, as applicable, in accordance with the terms of this Agreement. The parties agree that each Conveyance and Assumption Instrument shall be in a form consistent with the terms and conditions of this Agreement or the applicable Ancillary Agreement(s) with such provisions as are required by Applicable Law in the jurisdiction in which the relevant Assets or Liabilities are located. |
| (e) | The Company hereby waives, to the extent permitted under Applicable Law, compliance by itself and each and every member of the Company Group with the requirements and provisions of any ‘‘bulk-sale’’ or ‘‘bulk transfer’’ Applicable Laws of any jurisdiction that may otherwise be applicable with respect to the Transfer or sale of any or all of the Excluded Assets to the Company or any member of the Company Group. |
| (f) | SpinCo hereby waives, to the extent permitted under Applicable Law, compliance by itself and each and every member of the SpinCo Group with the requirements and provisions of any ‘‘bulk-sale’’ or ‘‘bulk transfer’’ Applicable Laws of any jurisdiction that may otherwise be applicable with respect to the Transfer or sale of any or all of the SpinCo Assets to SpinCo or any member of the SpinCo Group. |
| (g) | Direct Sale Purchaser hereby waives, to the extent permitted under Applicable Law, compliance with the requirements and provisions of any ‘‘bulk-sale’’ or ‘‘bulk transfer’’ Applicable Laws of any jurisdiction that may otherwise be applicable with respect to the Transfer or sale of any or all of the Direct Sale Assets to Direct Sale Purchaser. |
| (h) | Notwithstanding anything in Section 2.01, this Section 2.02, Section 2.03, or Section 2.05 to the contrary, no party or any of its Affiliates shall be required to undertake any action or arrangement contemplated by such section that would, or could reasonably be expected to, result in Tax treatment that is inconsistent with the Tax-Free Status; provided, however, that nothing in this Section 2.02(h) shall entitle the Company Group to fail to Transfer any Tiger Assets to the Tiger Group or the Tiger Group to fail to Transfer any Excluded Assets to the Company Group. |
| (b) | Each Intercompany Agreement, other than any Surviving Intercompany Agreements, and all rights and obligations of the members of the Tiger Group and the Company Group with respect thereto shall be terminated at or prior to the Distribution Effective Time, with no further Liability of any member of the Tiger Group or any member of the Company Group with respect thereto. |
| (c) | Each Liability to a Direct Sale Transferred Subsidiary, if it would constitute SpinCo Indebtedness if it remained in existence as of immediately prior to the Distribution Effective Time, and each Liability to a member of the SpinCo Group, if it would constitute Direct Sale Indebtedness if it remained in existence as of immediately prior to the consummation of the Direct Sale, shall be settled or otherwise terminated by the relevant members of the Tiger Group prior to the consummation of the Direct Sale. For the avoidance of doubt, the Transferred Notes shall not be terminated pursuant to this Section 2.03. |
| (b) | If the Transfer of any Asset or Liability intended to be Transferred is not consummated prior to or at the Distribution Effective Time as a result of the provisions of Section 2.05(a) or for any other reason (including any misallocated Transfers subject to Section 2.02(c)), then, insofar as reasonably possible (taking into account any applicable restrictions or considerations, in each case relating to the contemplated Tax treatment of the transactions contemplated hereby) and to the extent permitted by Applicable Law, the Person retaining such Asset or Liability, as the case may be, (i) shall thereafter hold such Asset or Liability, as the case may be, in trust for the use and benefit and burden of the Person entitled thereto (and at such Person’s sole expense) until the consummation of the Transfer thereof (or as otherwise determined by the parties) and (ii) with respect to any deferred Assets or Liabilities, use reasonable best efforts to develop and implement mutually acceptable arrangements to place the Person entitled to receive such Asset or Liability, insofar as reasonably possible, in substantially the same position as if such Asset or Liability had been Transferred as contemplated hereby and so that all the benefits and burdens relating to such Asset or Liability, including possession, use, risk of loss, potential for gain, dominion, ability to enforce the rights under or with respect to and control and command over such Asset or Liability, are to inure from and after the time such Transfer would have otherwise been made pursuant to Section 2.01 or Section 2.02, as the case may be, to the applicable member or members of the Company Group or the Tiger Group entitled to the receipt of such Asset or required to assume such Liability. In furtherance of the foregoing, the parties agree that to the fullest extent permitted by Applicable Law, (x) as of the time such Transfer would have otherwise been made pursuant to Section 2.01 or Section 2.02, as the case may be, each applicable member of the Company Group and the Tiger Group shall be deemed to have acquired complete and sole beneficial ownership over all of the Assets, together with all rights, powers and privileges incident thereto, and shall be deemed to have assumed in accordance with the terms of this Agreement all of the Liabilities, and all duties, obligations and responsibilities incident thereto, which such Person is entitled to acquire or required to assume pursuant to the terms of this Agreement and (y) each of the Company and SpinCo shall, and shall cause the members of its Group to, (A) treat for all Tax purposes the deferred Assets as Assets having been Transferred to and owned by the Person entitled to such Assets not later than the time such Transfer would have otherwise been made pursuant to Section 2.01 or Section 2.02, as the case may be, (B) treat for all Tax purposes the deferred Liabilities as having been assumed by the Person intended to be subject to such Liabilities not later than the time such Transfer would have otherwise been made pursuant to Section 2.01 or Section 2.02, as the case may be, and (C) neither report nor take any Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless, in case of clause (A), (B) or (C), otherwise required by applicable Tax law or the resolution of a Tax Proceeding prosecuted in accordance with Section 17 of the Tax Matters |
| (c) | The parties shall use commercially reasonable efforts to separate the Identified Shared Contracts into separate Contracts effective as of the Distribution Effective Time or as promptly as practicable thereafter so that the Tiger Group shall be entitled to rights and benefits and shall assume the related portion of Liabilities with respect to each Identified Shared Contract to the extent related to the Tiger Business and the Company Group shall have the rights and benefits and shall assume the related portion of Liabilities with respect to such Shared Contract to the extent related to the Company Business (provided that, notwithstanding anything in this Agreement to the contrary, neither Group shall be required to pay any amount to any Third Party, commence or participate in any Action or offer or grant any accommodation (financial or otherwise, including any accommodation or arrangement to remain secondarily liable or contingently liable for any Liability of the other Group) to any Third Party to obtain any such separation). Upon such separation of such Shared Contract, the separated Contract will be a Tiger Asset or an Excluded Asset, as applicable. If the counterparty to any Identified Shared Contract that is entitled under the terms of such Shared Contract to Consent to the separation of such Shared Contract has not provided such Consent, the terms of Section 2.05(b) shall apply to such Contract, mutatis mutandis. The obligations to seek separation set forth in this Section 2.05(c) shall terminate on the first anniversary of the Distribution Date or, if earlier with respect to any Identified Shared Contract, upon the expiration of the term of such Shared Contract (without any obligation to renew or extend). |
| (b) | Each of the Company (on behalf of itself and each member of the Company Group), SpinCo (on behalf of itself and each member of the Tiger Group) and Parent and Direct Sale Purchaser (on behalf of themselves and their respective Affiliates) further understands and agrees that if the disclaimer of express or implied representations and warranties contained in Section 2.06(a) is held unenforceable or is unavailable for any reason under the Applicable Laws of any jurisdiction outside the United States or if, under the Applicable Laws of a jurisdiction outside the United States, (x) both the Company or any member of the Company Group, on the one hand, and SpinCo or any member of the SpinCo Group, on the other hand, are jointly or severally liable for any Excluded Liability or any SpinCo Liability or (y) both the Company or any member of the Company Group, on the one hand, and Parent, Direct Sale Purchaser or any of their respective Affiliates, on the other hand, are jointly or severally liable for any Direct Sale Liability, then, in each case, the parties intend that, notwithstanding any provision to the contrary under the Applicable Laws of such non-U.S. jurisdictions, the provisions of the Transaction Agreements (including the disclaimer of all representations and warranties, allocation of Liabilities among the parties and their respective Subsidiaries, releases, indemnification and contribution of Liabilities) shall to the fullest extent permitted by Applicable Law prevail for any and all purposes between the parties and their respective Subsidiaries and Affiliates. |
| (b) | The rights of the members of the Tiger Group under subparagraphs (ii) and (iii) of Section 2.08(a) are subject to and conditioned upon the following: |
| (i) | Members of the Tiger Group shall be solely responsible for notifying any and all insurance companies of such claims and complying with all policy terms and conditions for pursuit and collection of such claims. The members of the Tiger Group shall not, without the written consent of the Company, amend, modify or waive any rights of the Company or other insureds under any such Insurance Policies and programs. The members of the Tiger Group shall exclusively bear and be liable (and the Company shall have no obligation to repay or reimburse any member of the Tiger Group) for all uninsured, uncovered, unavailable or uncollectible amounts relating to or associated with all such claims. |
| (ii) | With respect to coverage claims or requests for benefits asserted by members of the Tiger Group under the Available Insurance Policies, the Company shall have the right but not the duty to monitor and/or associate with such claims at the Company’s sole cost and expense. The members of the Tiger Group shall be liable for any fees, costs and expenses reasonably incurred by the |
| (c) | Notwithstanding anything contained in this Agreement, (i) nothing in this Agreement shall limit, waive or abrogate in any manner any rights of the Company to insurance coverage for any matter, whether relating to the members of the Tiger Group or otherwise, and (ii) the Company shall retain the exclusive right to control the Available Insurance Policies and all of its other Insurance Policies, including the right to exhaust, settle, release, commute, buy-back or otherwise resolve disputes with respect to any of its Insurance Policies and to amend, modify or waive any rights under any such Insurance Policies, notwithstanding whether any such Insurance Policies apply to any liabilities or losses as to which any member of the Tiger Group has made, or could in the future make, a claim for coverage; provided, that the members of the Tiger Group shall cooperate with the Company with respect to coverage claims and requests for benefits and sharing such information as is reasonably necessary in order to permit the Company to manage and conduct its insurance matters as the Company deems appropriate. |
| (d) | Nothing in this Section 2.08 shall limit, modify or in any way affect the rights and obligations of the parties under Article 5; provided, however, that any Insurance Proceeds actually collected with respect to a particular Indemnifiable Loss shall be taken into account under and to the extent required by Section 5.05. No payments due under this Section 2.08 shall affect, be affected by, or be subject to set off against, any payments due pursuant to Section 2.10 or Section 2.11. Whenever this Section 2.08 requires any member(s) of the Tiger Group to take any action after the Closing, such requirement shall be deemed to constitute an undertaking on the part of Parent to take such action or to cause such member(s) of the Tiger Group to take such action. |
| (b) | In the event the Company disputes the correctness of the Proposed SpinCo Closing Cash, the Proposed SpinCo Closing Indebtedness or the Proposed Excess Factored Customer Receivables, the Company shall notify SpinCo in writing of its objections within 60 days after receipt of the SpinCo Proposed Statement, and shall set forth, in writing and in reasonable detail, the reasons for the Company’s objections the amount of each item in dispute and the basis therefor and the amount that the Company believes is the correct amount for each such disputed item (such writing, the ‘‘SpinCo Dispute Notice’’) (including if the Company believes that it does not have sufficient information because SpinCo failed to make available to the Company all books, records, documents and work papers required to be made available to the Company under Section 2.10(e); provided that, in such circumstance, the Company’s obligation to provide reasonable detail of its objections set forth in the |
| (c) | In the event that the Company timely delivers a SpinCo Dispute Notice to SpinCo in accordance with the terms hereof, SpinCo and the Company shall negotiate in good faith to reconcile their differences, and any resolution by them as to any such disputes shall be final, binding and conclusive on all of the parties. If the Company and SpinCo are unable to resolve any such dispute within 10 Business Days of SpinCo’s receipt of the SpinCo Dispute Notice from the Company, SpinCo and the Company shall submit the items remaining in dispute (such items, the ‘‘SpinCo Unresolved Items’’) for resolution to Deloitte & Touche LLP or, if such firm is unwilling to act, a nationally recognized accounting firm mutually agreed by SpinCo and the Company (the ‘‘SpinCo Independent Accounting Firm’’). Promptly following the engagement of the SpinCo Independent Accounting Firm, and in any event within 10 Business Days following such engagement, SpinCo and the Company shall submit to such SpinCo Independent Accounting Firm (and the other party) all documentary materials and analyses that SpinCo or the Company, as the case may be, believes to be relevant to a resolution of the SpinCo Unresolved Items; provided that the value of any SpinCo Unresolved Items submitted to the SpinCo Independent Accounting Firm shall not be (x) greater than the greatest value for such item claimed in the SpinCo Dispute Notice, on the one hand, and the SpinCo Proposed Statement, on the other hand, or (y) less than the smallest value for such item claimed in the SpinCo Dispute Notice, on the one hand, and the SpinCo Proposed Statement, on the other hand. The parties agree that there shall be no ex parte discussions with the SpinCo Independent Accounting Firm. The SpinCo Independent Accounting Firm shall consider only the SpinCo Unresolved Items. The SpinCo Independent Accounting Firm shall, within 30 days after receipt of all such submissions by SpinCo and the Company, determine and deliver to SpinCo and the Company a written report containing such SpinCo Independent Accounting Firm’s determination of all SpinCo Unresolved Items (which determinations shall be made in accordance with the Accounting Principles), and such written report and the determinations contained therein shall be final, binding and conclusive on all of the parties; provided that the SpinCo Independent Accounting Firm shall not assign a value to any SpinCo Unresolved Items greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party. All fees and expenses of the SpinCo Independent Accounting Firm relating to the work, if any, to be performed by the SpinCo Independent Accounting Firm hereunder shall be borne between SpinCo, on the one hand, and the Company, on the other hand, based upon a fraction, the numerator of which is the portion of the aggregate amount of the SpinCo Unresolved Items not awarded to the applicable party and the denominator of which is the aggregate amount of all of the SpinCo Unresolved Items. For example, if the Company challenges items underlying the calculations of Proposed SpinCo Closing Indebtedness in the net amount of $1,000,000, and the SpinCo Independent Accounting Firm determines that the Company has a valid claim for $400,000 of the $1,000,000, the Company shall bear 60% of the fees and expenses of the SpinCo Independent Accounting Firm and SpinCo shall bear 40% of the fees and expenses of the SpinCo Independent Accounting Firm. The SpinCo Cash Amount as of immediately prior to the Distribution Effective Time, as finally determined pursuant to this Section 2.10 (whether by agreement of the Company and SpinCo or by determination of the SpinCo Independent Accounting Firm), is referred to herein as the ‘‘Final SpinCo Closing Cash’’. The SpinCo Indebtedness as of immediately prior to the Distribution Effective Time, as finally determined pursuant to this Section 2.10 (whether by agreement of the Company and SpinCo or by determination of the SpinCo Independent Accounting Firm), is referred to herein as the ‘‘Final SpinCo Closing Indebtedness’’. The Excess Factored Customer Receivables, as finally determined pursuant to this Section 2.10 (whether by agreement of the Company and SpinCo or by determination of the SpinCo Independent Accounting Firm), is referred to herein as the ‘‘Final Excess Factored Customer Receivables’’. |
| (d) | If the SpinCo Adjustment Amount is a positive number (such amount, the ‘‘SpinCo Increase |
| (e) | Each of the Company and SpinCo shall make available to the other party and, if applicable, to the SpinCo Independent Accounting Firm, all books, records, documents and work papers (subject to, in the case of independent accountant work papers, such other party or the SpinCo Independent Accounting Firm, as applicable, entering into a customary release agreement with respect thereto) used, created or prepared by or for SpinCo in connection with the preparation of the SpinCo Proposed Statement; provided that the Company shall not be obligated to provide books, records, documents and work papers pursuant to this Section 2.10 other than to the extent such books, records, documents and work papers relate to the Tiger Business and existed prior to the Closing. |
| (b) | In the event the Company disputes the correctness of the Proposed Direct Sale Closing Cash or the Proposed Direct Sale Closing Indebtedness, the Company shall notify Direct Sale Purchaser in writing of its objections within 60 days after receipt of the Direct Sale Proposed Statement, and shall set forth, in writing and in reasonable detail, the reasons for the Company’s objections the amount of each item in dispute and the basis therefor and the amount that the Company believes is the correct amount for each such disputed item (such writing, the ‘‘Direct Sale Dispute Notice’’) (including if the Company believes that it does not have sufficient information because Direct Sale Purchaser failed to make available to the Company all books, records, documents and work papers required to be made available to the Company under Section 2.11(e); provided that, in such circumstance, the Company’s obligation to provide reasonable detail of its objections set forth in the Direct Sale Dispute Notice shall be limited to the information that it has actually received from or on behalf of Direct Sale Purchaser). The Company shall be deemed to have agreed with all other items and amounts contained in the Direct Sale Proposed Statement not so objected to in a Direct Sale Dispute Notice within the 60-day review period specified in this Section 2.11(b). In the event that the Company fails to provide a Direct Sale Dispute Notice to Direct Sale Purchaser within the 60-day review period specified in this Section 2.11(b), the Company will be deemed to have agreed with all of the items in the Direct Sale Proposed Statement, and the Direct Sale Proposed Statement shall be final, binding and conclusive upon the parties. |
| (c) | In the event that the Company timely delivers a Direct Sale Dispute Notice to Direct Sale Purchaser in accordance with the terms hereof, Direct Sale Purchaser and the Company shall negotiate in good faith to reconcile their differences, and any resolution by them as to any such disputes shall be final, binding and conclusive on all of the parties. If the Company and Direct Sale Purchaser are unable to resolve any such dispute within 10 Business Days of Direct Sale Purchaser’s receipt of the Direct Sale Dispute Notice from the Company, Direct Sale Purchaser and the Company shall submit the items remaining in |
| (d) | If the Direct Sale Adjustment Amount is a positive number (such amount, the ‘‘Direct Sale Increase Amount’’), then, promptly (and in any event within three Business Days) following the determination of Final Direct Sale Closing Cash and Final Direct Sale Closing Indebtedness, Direct Sale Purchaser shall pay to the Company an amount equal to the Direct Sale Increase Amount in immediately available funds by wire transfer to a bank account or accounts designated in writing by the Company. If the Direct Sale Adjustment Amount is a negative number (the absolute value of such amount, the ‘‘Direct Sale Deficit Amount’’), then, promptly (and in any event within three Business Days) following the determination of Final Direct Sale Closing Cash and Final Direct Sale Closing Indebtedness, the Company shall pay, or cause to be paid, to Direct Sale Purchaser an amount equal to the Direct Sale Deficit Amount in immediately available funds by wire transfer to a bank account designated in writing by Direct Sale Purchaser. |
| (e) | Each of the Company and Direct Sale Purchaser shall make available to the other party and, if applicable, to the Direct Sale Independent Accounting Firm, all books, records, documents and work papers (subject to, in the case of independent accountant work papers, such other party or the Direct |
| (b) | If the Company elects to effect the Distribution in the form of the One-Step Spin-Off, the Board (or a committee of the Board acting pursuant to delegated authority), in accordance with all Applicable Laws and the rules and regulations of NYSE, shall set the Record Date and the Distribution Date, and the Company shall establish appropriate procedures in connection with the Distribution, and shall declare, pay and otherwise effectuate the Distribution, in accordance with all Applicable Laws and the rules and regulations of NYSE. In connection with the One-Step Spin-Off, no less than the Distribution Share Minimum (or more than the Distribution Share Maximum) of the shares of SpinCo Common Stock will be distributed to Record Holders in the manner determined by the Company and in accordance with Section 3.02. |
| (c) | If the Company elects to effect the Distribution in the form of the Exchange Offer, subject to the terms and conditions of the Merger Agreement, the Company shall determine (and, subject to the 35 Business Day limit set forth below, may amend) the terms and conditions of the Exchange Offer, including the number of shares of SpinCo Common Stock that will be offered for each validly tendered share of Company Common Stock (which number of shares of SpinCo Common Stock shall be at least equal to |
| (b) | If the Distribution is effected by means of the Exchange Offer, subject to the terms and conditions established pursuant to Section 3.01(c), each Company stockholder may elect in the Exchange Offer to exchange a number of shares of Company Common Stock held by such Company stockholder for shares of SpinCo Common Stock at such exchange ratio and subject to such other terms and conditions as may be determined by the Company and set forth in the SpinCo Registration Statement. The terms and conditions of any Clean-Up Spin-Off shall be as determined by the Company, subject to the provisions of Section 3.02(a), mutatis mutandis, and in compliance with all Applicable Laws and the rules and regulations of the NYSE. |
| (c) | No party, nor any of its Affiliates, shall be liable to any Person in respect of any shares of SpinCo Common Stock, or distributions in respect thereof, that are delivered to a public official in accordance with the provisions of any applicable escheat, abandoned property or similar Applicable Law. |
| (b) | Upon consummation of the One-Step Spin-Off or the Exchange Offer, the Company shall deliver to the Exchange Agent book-entry shares representing the SpinCo Common Stock being distributed in the One-Step Spin-Off or exchanged in the Exchange Offer, as the case may be, for the account of the Company stockholders that are entitled to such shares. Upon a Clean-Up Spin-Off, if any, the Company shall deliver to the Exchange Agent additional book-entry shares representing the SpinCo Common Stock being distributed in the Clean-Up Spin-Off for the account of the Company stockholders that are entitled to receive shares of Company Common Stock in such Clean-Up Spin-Off. The Exchange Agent shall hold such book-entry shares for the account of the Company stockholders pending the Merger, as provided in the Merger Agreement. From immediately after the Distribution Effective Time and to the Merger Effective Time, the shares of SpinCo Common Stock shall not be transferable and the transfer agent for the SpinCo Common Stock shall not transfer any shares of SpinCo Common Stock. the Company shall give written notice of the Distribution Effective Time to the Exchange Agent with written authorization to proceed as set forth in Section 3.02. |
| (b) | SpinCo and its Affiliates shall (i) except as permitted under this Section 4.02 and the Trademark License Agreement, (A) immediately upon the Distribution Date cease all use of any of the Company Names and Marks on or in connection with all stationery, business cards, purchase orders, lease agreements, warranties, indemnifications, invoices and other similar correspondence and other documents of a contractual nature and (B) complete the removal of the Company Names and Marks from all product, services and technical information promotional brochures prior to expiration of the Trademark License Agreement and (ii) with respect to Assets or SpinCo Assets bearing any Company Names and Marks, use their commercially reasonable efforts to relabel such Assets or SpinCo Assets or remove such Company Names and Marks from such Assets or SpinCo Assets as promptly as practicable, and in any event prior to the expiration of the Trademark License Agreement. |
| (c) | SpinCo, for itself and its Affiliates, agrees that, after the Distribution Date, SpinCo and its Affiliates (i) will not expressly, or by implication, do business as or represent themselves as the Company or any of its Affiliates, (ii) with respect to Assets or other assets managed, operated or leased after the |
| (d) | Except as contemplated by the Trademark License Agreement, promptly after the Distribution Date, but in any event no later than 10 Business Days after the Distribution Date, SpinCo and its Affiliates shall make all filings with any and all offices, agencies and bodies and take all other actions necessary to adopt new corporate names, registered names, and registered fictitious names of the members of the Tiger Group and their respective Affiliates that do not consist in whole or in part of, and are not dilutive of or confusingly similar to, the Company Names and Marks (‘‘New Corporate Names’’). Upon receipt of confirmation from the appropriate registry that such name changes have been effected, SpinCo shall provide the Company with written proof that such name changes have been effected. SpinCo and its Affiliates shall use best efforts to adopt New Corporate Names as soon as possible after the Distribution Effective Time. |
| (e) | SpinCo, for itself and its Affiliates, acknowledges and agrees that, except to the extent expressly provided in this Section 4.02 or in the Trademark License Agreement, neither SpinCo nor any of its Affiliates shall have any rights in any of the Company Names and Marks and neither SpinCo nor any of its Affiliates shall contest the ownership or validity of any rights of the Company or any of its Affiliates in or to any of the Company Names and Marks. |
| (b) | If, after the Distribution Date, the Company or SpinCo identifies any item of Company Intellectual |
| (i) | The Company, for itself and each member of the Company Group and, to the extent permitted by Applicable Law, all Persons who at any time prior to the Distribution Effective Time were directors, officers, partners, managers, agents or employees of any member of the Company Group (in their respective capacities as such), in each case, together with their respective heirs, executors, administrators, successors and assigns, does hereby remise, release and forever discharge SpinCo and the other members of the Tiger Group, their respective Affiliates, successors and assigns, and all Persons who at any time prior to the Distribution Effective Time have been stockholders, members, partners, directors, managers, officers, agents or employees of any member of the Tiger Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns (collectively, the ‘‘Tiger Released Persons’’) from any and all Liabilities, whether at law or in equity (including any right of contribution), whether arising under any Contract, by operation of law or otherwise, in each case, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Effective Time, including in connection with the Separation and the Distribution and any of the other transactions contemplated hereunder and under the Transaction Agreements. Without limitation, the foregoing release includes a release of any rights and benefits with respect to such Liabilities that the Company and each member of the Company Group, and their respective successors and assigns, now has or in the future may have conferred upon them by virtue of any statute or common law principle which provides that a general release does not extend to claims which a party does not know or suspect to exist in its favor at the time of executing the release, if knowledge of such claims would have materially affected such party’s settlement with the obligor. In this regard, the Company hereby acknowledges that it is aware that factual matters now unknown to it may have given or may hereafter give rise to Liabilities that are presently unknown, unanticipated and unsuspected, and it further agrees that this release has been negotiated and agreed upon in light of that awareness and it nevertheless hereby intends to release the Tiger Released Persons from the Liabilities described in the first sentence of this Section 5.01(a)(i). |
| (ii) | SpinCo, for itself and each member of the Tiger Group and, to the extent permitted by Applicable Law, all Persons who at any time prior to the Distribution Effective Time were directors, officers, partners, managers, agents or employees of Parent or any member of the Tiger Group (in their respective capacities as such), in each case, together with their respective heirs, executors, administrators, successors and assigns, does hereby remise, release and forever discharge the Company and the other members of the Company Group, their respective Affiliates, successors and assigns, and all Persons who at any time prior to the Distribution Effective Time have been stockholders, members, partners, directors, managers, officers, agents or employees of any member of the Company Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns (collectively, the ‘‘Company Released Persons’’) from any and all Liabilities, whether at law or in equity (including any right of contribution), whether arising under any Contract, by operation of law or otherwise, in each case, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Distribution Effective Time, including in connection with the Separation and the Distribution and any of the other transactions contemplated hereunder and under the Transaction Agreements. Without limitation, the foregoing release includes a release of any rights and benefits with respect to such Liabilities that SpinCo and each member of the Tiger Group, and their respective successors and assigns, now has or in the future may have conferred upon them by virtue of any statute or common law principle which provides that a general release does not extend to claims which a party does not know or suspect to exist in its favor at the time of executing the release, if knowledge of such claims would have materially affected such party’s settlement with the obligor. In this regard, each of Parent and SpinCo hereby acknowledges that it |
| (b) | Nothing contained in Section 5.01(a) shall limit or otherwise affect any Person’s rights or obligations pursuant to or contemplated by, or ability to enforce, any Surviving Intercompany Agreement or Surviving Intercompany Account, in each case in accordance with its terms. |
| (c) | Following the Distribution Effective Time, the Company shall not, and shall cause each other member of the Company Group not to, make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution, recovery or any indemnification, against Parent, SpinCo or any of their respective Affiliates, or any other Person released with respect to any Liabilities released pursuant to Section 5.01(a)(i). Following the Distribution Effective Time, Parent shall not, and shall cause its Affiliates, SpinCo and each other member of the Tiger Group not to, make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution, recovery or any indemnification, against the Company or any of its Affiliates, or any other Person released with respect to any Liabilities released pursuant to Section 5.01(a)(ii). |
| (i) | if a SpinCo Indemnitee has made a determination that it is or may be entitled to indemnification in respect of any SpinCo Claim, the SpinCo Indemnitee shall so notify the Company as promptly as reasonably possible after becoming aware of the existence of such SpinCo Claim; and |
| (ii) | if a Company Indemnitee has made a determination that it is or may be entitled to indemnification in respect of any Company Claim, the Company Indemnitee shall so notify Parent as promptly as reasonably possible after becoming aware of the existence of such Company Claim (any such claim made pursuant to Section 5.04(a)(i) or this Section 5.04(a)(ii), a ‘‘Direct Claim’’). |
| (b) | Third-Party Claims. If an Indemnitee receives notice or otherwise learns of the assertion by any Third Party of any claim or demand or of the commencement by any Third Party of any Action as to which an Indemnifying Party may be obligated to provide indemnification pursuant to this Agreement (a ‘‘Third-Party Claim’’), the Company (on behalf of the Company Indemnitees) or Parent (on behalf of the SpinCo Indemnitees), as applicable (such claimant, the ‘‘Claiming Party’’), shall promptly notify the Indemnifying Party of the Third-Party Claim in writing and in reasonable detail describing the basis for any claim for indemnification hereunder; provided, however, that the failure to provide notice of any such Third-Party Claim pursuant to this sentence shall not release the Indemnifying Party from any of its obligations except and solely to the extent the Indemnifying Party shall have been actually prejudiced as a result of such failure. |
| (c) | Subject to the provisions of this Section 5.04(c), the Indemnifying Party has the right, exercisable by written notice to the Claiming Party within 30 days after receipt of notice from the Claiming Party pursuant to Section 5.04(b), to assume and conduct the defense (including settlement) of such Third-Party Claim in accordance with the limits set forth in this Agreement with counsel selected by the Indemnifying Party and reasonably acceptable to the other party. If the Indemnifying Party does not assume the defense of a Third-Party Claim in accordance with this Section 5.04(c), the Indemnitee may defend the Third-Party Claim. If the Indemnifying Party has assumed the defense of a Third-Party Claim as provided in this Section 5.04(c), the Indemnifying Party shall not be liable for any legal expenses incurred by the Indemnitee in connection with the defense of the Third-Party Claim; provided, however, that if (A) after consultation with outside counsel, there exists a conflict of interest between the Indemnifying Party and the applicable Indemnitee(s) in the defense of such Third-Party Claim by the Indemnifying Party, (B) the Third-Party Claim seeks an injunction or equitable relief against the Indemnitee or any of its Affiliates, (C) the Third-Party Claim relates to or arises in connection with any criminal proceeding, action, indictment, allegation or investigation or (D) the Indemnifying Party fails to take reasonable steps necessary to defend diligently such Third-Party Claim, then, in each case, the Indemnitee may assume its own defense, and the Indemnifying Party shall be liable for the reasonable costs or expenses incurred in connection with such defense. The Indemnifying Party or the Indemnitee, as the case may be, has the right to participate in (but, subject to the prior sentence, not control), at its own expense, the defense of any Third-Party Claim that the other party is defending as provided in this Agreement. The Indemnifying Party, if it has assumed the defense of any Third-Party Claim as provided in this Agreement, may not, without the prior written consent of the Indemnitee, consent to a settlement or compromise of, or the entry of any judgment arising from, any such Third-Party Claim that (i) does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnitee of a complete release from all liability in respect of such Third-Party Claim or (ii) provides for injunctive or other nonmonetary relief affecting the Indemnitee or any of its Affiliates, or for monetary relief with respect to which the Indemnitee and its Affiliates are not entitled to indemnification under this Agreement. The Indemnitee shall not consent to a settlement or compromise of, or the entry of any judgment arising from, any Third-Party Claim, without the prior written consent of the Indemnifying Party (such consent not to be unreasonably withheld, conditioned or delayed). |
| (d) | The Claiming Party and the Indemnifying Party shall (and the Claiming Party shall cause the applicable Indemnitee(s) to) make reasonably available to each other and their respective agents and Representatives all relevant information available to them that are necessary or appropriate for the defense of any Third-Party Claim, subject to any bona fide claims of attorney-client privilege, and each of the Indemnifying Party and the Claiming Party shall use its reasonable efforts to assist, and to cause the employees and counsel of such party to assist, in the defense of such Third-Party Claim. If a party asserts its right to participate in the defense of any Third-Party Claim, the party controlling the defense and investigation of such Third-Party Claim shall act in good faith and reasonably consult and cooperate with the Indemnitee or the Indemnifying Party, as the case may be, in connection with any appearances, briefs, arguments and proposals made or submitted by or on behalf of any party in connection with the Third-Party Claim (including considering in good faith all reasonable additions, deletions or changes suggested by the Indemnitee or the Indemnifying Party, as the case may be, in connection any filings made with any Governmental Authority or proposals to the Third Party claimant in connection therewith). |
| (e) | The provisions of this Section 5.04 (other than this Section 5.04(e)) and Section 5.07 (other than Section 5.07(f)) shall not apply to Taxes (Taxes being governed by the Tax Matters Agreement). |
| (f) | Each party shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to collect or recover, or allow the Indemnifying Party to collect or recover, or cooperate with each other in collecting or recovering, any Insurance Proceeds that may be collectible or recoverable respecting the Liabilities for which indemnification may be available under this Article 5. If an Indemnifying Party makes any payment for any Indemnifiable Losses pursuant to the provisions of this Article 5, such Indemnifying Party shall be subrogated, to the extent of such payment, to all rights and remedies of the Indemnitee to any insurance benefits or other claims of the Indemnitee with respect to such Indemnifiable Losses and with respect to the matter giving rise to such Indemnifiable Losses. |
| (b) | The parties hereby agree that an insurer or other Third Party that would otherwise be obligated to pay any amount shall not be relieved of the responsibility with respect thereto or have any subrogation rights with respect thereto by virtue of any provision contained in this Agreement or any Transaction Agreement, and that no insurer or any other Third Party shall be entitled to a ‘‘windfall’’ (e.g., a benefit they would not otherwise be entitled to receive, or the reduction or elimination of an insurance coverage obligation that they would otherwise have, in the absence of the indemnification or release provisions) by virtue of any provision contained in this Agreement or any Transaction Agreement. Notwithstanding the foregoing, an Indemnifying Party may not delay making any Indemnity Payment required under the terms of this Agreement, or otherwise satisfying any indemnification obligation, pending the outcome of any Action to collect or recover Insurance Proceeds, and an Indemnitee need not attempt to collect any Insurance Proceeds prior to making a claim for indemnification or receiving any Indemnity Payment otherwise owed to it under this Agreement or any Transaction Agreement. |
| (c) | Any recovery by any party (including any of its Indemnitees) for any Indemnifiable Loss subject to indemnification pursuant to this Article 5 shall be calculated net of any Tax benefit actually realized by the Indemnitee arising from the incurrence or payment of any such Indemnifiable Loss (determined on a ‘‘with and without’’ basis and by treating the loss or deduction (or a carryforward thereof) attributable to such Indemnifiable Loss as the last item taken into account in determining the applicable Indemnitee’s Tax liability). |
| (b) | The rights and obligations of each party and their respective Indemnitees under this Article 5 shall survive (i) the sale or other Transfer by any party or its Subsidiaries of any Assets or businesses or the assignment by it of any Liabilities and (ii) any merger, consolidation, business combination, sale of all or substantially all of the Assets, restructuring, recapitalization, reorganization or similar transaction involving either party or any of its Subsidiaries. |
| (c) | The parties intend and hereby agree that this Article 5 sets forth the exclusive remedy of the parties and the parties to the Conveyance and Assumption Instruments, as applicable, following the Distribution Effective Time for any Liabilities arising out of any breach of the covenants contained in this Agreement (including with respect to Indemnifiable Losses arising out of, resulting from or related to Excluded Liabilities, Direct Sale Liabilities or SpinCo Liabilities, as the case may be) or any Conveyance and Assumption Instrument, except that nothing contained in this Section 5.07(c) shall impair any right of any Person (i) to specific performance under this Agreement or (ii) to equitable relief as provided in Section 7.14 or in any other Transaction Agreement. In furtherance of the foregoing, each party waives, to the fullest extent permitted under Applicable Law, any and all rights, claims and causes of action it may have against the other party in connection herewith or any Conveyance and Assumption Instrument or arising under or based upon any Applicable Law other than the right to seek indemnity pursuant to this Article 5 and the right to seek the relief described in clauses (i) or (ii) of the preceding sentence. Each party shall cause its Representatives to comply with this Section 5.07(c). |
| (d) | Any amounts payable pursuant to this Article 5 shall be paid without duplication, and in no event shall any party be indemnified or receive contribution under different provisions of any Transaction Agreement for the same Liabilities. In furtherance of the foregoing, the Company shall not be required to indemnify any SpinCo Indemnitee for any Liability pursuant to Section 5.02 if and to the extent such Liability was taken into account in the calculation of Final SpinCo Closing Indebtedness or Final Direct Sale Closing Indebtedness. |
| (e) | From and after the Distribution Effective Time, with respect to any Action where the Company or SpinCo (or any member of such other party’s Group) is a defendant, when and if requested by such party, the other party shall use commercially reasonable efforts to petition the applicable court or tribunal to remove the requesting party as a defendant to the extent that such Action relates solely to Assets or Liabilities that the other party (or any member of such other party’s Group) has been allocated pursuant to Article 2, and the other party shall cooperate and assist in any required communication with any plaintiff or other related Third Party. |
| (f) | The parties shall report for all Tax purposes any amounts payable pursuant to this Article 5 in accordance with Section 15(b) of the Tax Matters Agreement. |
| (g) | No party shall have any right to set off any losses (including Indemnifiable Losses) under this Article 5 against any payments to be made by such party pursuant to this Agreement or any other agreement between the parties, including the Merger Agreement or any of the Ancillary Agreements. |
| (h) | Notwithstanding anything herein to the contrary, nothing in this Article 5 is intended to provide any rights of indemnification in respect of any other Transaction Agreement. |
| (b) | Each of the Company and SpinCo shall inform their respective Representatives who have or have access to the other party’s Evaluation Material or other information provided pursuant to this Article 6 of their obligation to hold such information confidential in accordance with the provisions of this Agreement. |
| (c) | Nothing in this Article 6 shall require any party to violate any agreement with any Third Party regarding the confidentiality of confidential and proprietary information relating to that Third Party or its business; provided, however, that in the event that a party would be required under this Section 6.01 to disclose any such information, such party shall use commercially reasonable efforts to seek to obtain such Third Party’s written consent to the disclosure of such information and to otherwise disclose any such information in a manner that would not reasonably be expected to violate such agreement. |
| (b) | During such six-year or statute of limitations period, as applicable, (i) Representatives of the Company and its Affiliates shall, upon reasonable written notice and for any reasonable business purpose, have reasonable access during normal business hours to examine, inspect and copy such books and records and (ii) SpinCo shall provide to the Company and its Affiliates reasonable access to such original books and records of the members of the Tiger Group and the Tiger Business as the Company or its Affiliates shall reasonably request in connection with any Action to which the Company or any of its Affiliates are parties or in connection with the requirements of any Applicable Law. The Company or its Affiliates, as applicable, shall return such original books and records to SpinCo or its Affiliate as soon as such books and records are no longer needed in connection with the circumstances described in the immediately preceding sentence. |
| (c) | After such six-year or statute of limitations period, as applicable, before SpinCo or any of its Affiliates shall dispose of any of such books and records, SpinCo shall give at least 90 days’ prior written notice of such intention to dispose of any such books and records to the Company, and the Company and its Affiliates shall be given an opportunity, at their cost and expense, to remove and retain all or any part of such books and records as it may elect upon reasonable written notice to SpinCo. |
| (d) | Notwithstanding anything to the contrary in this Section 6.05, the Tax Matters Agreement will govern the retention of Tax Returns, schedules and work papers and all material records or other documents relating thereto. |
| (b) | From and after the Distribution Effective Time, SpinCo shall not, and SpinCo shall cause its Affiliates, including Parent and each other member of the Tiger Group, and its and their respective Representatives not to, directly or indirectly, without the prior written consent of the Company, disclose to any Third Party (other than to each other and their respective Representatives who need to know the information and who are advised of the confidential nature of such information) any Evaluation Material related to the Company Business; provided, that the foregoing restrictions shall not (i) apply to |
| (c) | For the avoidance of doubt and notwithstanding any other provision of this Section 6.06, (i) the sharing of Privileged Information shall be governed solely by Section 6.07, and (ii) information that is subject to any confidentiality provision or other disclosure restriction in any Ancillary Agreement shall be governed by the terms of such Ancillary Agreement. |
| (b) | Post-Distribution Services. The parties recognize that legal and other professional services will be provided following the Distribution Effective Time to each of the Company and SpinCo. The parties further recognize that certain of such post-Distribution services will be rendered solely for the benefit of the Company or SpinCo, as the case may be, while other such post-Distribution services may be rendered with respect to Actions or other matters which involve both the Company and SpinCo. To the fullest extent permitted by Applicable Law, with respect to such post-Distribution services and related Privileged Information, the parties agree as follows: |
| (i) | All Privileged Information relating to any claims, proceedings, litigation, disputes or other matters which involve both the Company Group and the Tiger Group shall be subject to a shared Privilege among the parties involved in the claims, proceedings, litigation, disputes or other matters at issue; and |
| (ii) | Except as otherwise provided in Section 6.07(b)(i), Privileged Information relating to post-Distribution services provided solely to one of the Company Group or the Tiger Group shall not be deemed shared between the parties; provided, that the foregoing shall not be construed or interpreted to restrict the right or authority of the parties (x) to enter into any further agreement, not otherwise inconsistent with the terms of this Agreement, concerning the sharing of Privileged Information or (y) otherwise to share Privileged Information without waiving any Privilege which could be asserted under Applicable Law. |
| (c) | The parties agree as follows regarding all Privileged Information with respect to which the parties shall have a shared Privilege under Section 6.07(a) or (b): |
| (i) | subject to Section 6.07(c)(iii), no member of the Company Group or Tiger Group may waive, or allege or purport to waive, any Privilege which could be asserted under any Applicable Law, and in which the other (or a member of its Group) has a shared Privilege, without the written consent of the other party; |
| (ii) | if a dispute arises between or among the parties or their respective Subsidiaries regarding whether a Privilege should be waived to protect or advance the interest of any party, each party agrees that it shall negotiate in good faith, shall endeavor to minimize any prejudice to the rights of the other party and each of the Company and SpinCo, on behalf of themselves and their respective Group, specifically agrees that it shall not withhold consent to waive for any purpose except to protect its own legitimate interests; and |
| (iii) | in the event of any litigation or dispute between the parties, or any members of their respective Groups, either the Company or SpinCo, on behalf of themselves and their respective Group, may waive a Privilege in which the other party or member of such Group has a shared Privilege, without obtaining the consent of the other party; provided, that such waiver of a shared Privilege shall to the fullest extent permitted by Applicable Law be effective only as to the use of Privileged Information with respect to the litigation or dispute between the parties and/or the applicable members of their respective Groups, and shall not operate as a waiver of the shared Privilege with respect to Third Parties. |
| (d) | The transfer of all information pursuant to this Agreement is made in reliance on the agreement of the Company or SpinCo as set forth in Section 6.06 and this Section 6.07(d), to maintain the confidentiality of Privileged Information and to assert and maintain any applicable Privilege. The access to information being granted pursuant to Section 6.01 and Section 6.02, the agreement to provide witnesses and individuals pursuant to Section 6.03, the furnishing of notices and documents and other cooperative efforts contemplated by Section 5.04 and the transfer of Privileged Information between the parties and their respective Subsidiaries pursuant to this Agreement shall not be deemed a waiver of any Privilege that has been or may be asserted under this Agreement or otherwise. |
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General Electric Company
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33-41 Farnsworth Street
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Boston, MA 02210
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Attention:
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General Counsel
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Facsimile No.:
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+44 207302 6834
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E-mail:
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jim.waterbury@ge.com
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with a copy to:
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Davis Polk & Wardwell LLP
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450 Lexington Avenue
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New York, New York 10017
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Attention:
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William L. Taylor
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Lee Hochbaum
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Facsimile No.:
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(212) 701-5800
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E-mail:
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william.taylor@davispolk.com
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lee.hochbaum@davispolk.com
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Westinghouse Air Brake Technologies Corporation
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1001 Air Brake Avenue
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Wilmerding, Pennsylvania
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Attention:
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David L. DeNinno
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Facsimile No.:
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412-825-1305
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E-mail:
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ddeninno@wabtec.com
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with a copy to:
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Jones Day
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250 Vesey Street
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New York, New York 10281
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Attention:
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Robert A. Profusek
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Peter E. Izanec
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Facsimile No.:
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(212) 755-7306
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E-mail:
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raprofusek@jonesday.com
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peizanec@jonesday.com
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| (b) | No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Applicable Law. |
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GENERAL ELECTRIC COMPANY
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By:
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/s/ Aris Kekedjian
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Name:
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Aris Kekedjian
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Title:
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Vice President
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TRANSPORTATION SYSTEMS HOLDINGS INC.
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By:
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Name:
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Title:
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GENERAL ELECTRIC COMPANY
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By:
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Name:
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Title:
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TRANSPORTATION SYSTEMS HOLDINGS INC.
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By:
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/s/ William John Godsman
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Name:
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William John Godsman
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Title:
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Vice President
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WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
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By:
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/s/ Albert J. Neupaver
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Name:
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Albert J. Neupaver
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Title:
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Executive Chairman
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WABTEC US RAIL, INC.
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By:
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/s/ Scott E. Wahlstrom
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Name:
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Scott E. Wahlstrom
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Title:
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Vice President
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| (a) | Each Stockholder (severally and not jointly) hereby irrevocably and unconditionally agrees that until the Expiration Time, at the Parent Stockholder Meeting and at any other meeting of the stockholders of Parent, however called, in each case including any adjournment or postponement thereof, such Stockholder shall, in each case to the fullest extent that the Covered Shares of such Stockholder are entitled to vote thereon or consent thereto: |
| (i) | appear at each such meeting or otherwise cause such Covered Shares to be counted as present thereat for purposes of calculating a quorum; and |
| (ii) | vote (or cause to be voted), in person or by proxy, all of such Covered Shares (A) in favor of the approval of the Parent Share Issuance, the Parent Charter Amendment and any related action reasonably requested by the Company in furtherance of the foregoing, including, without limiting any of the foregoing obligations, in favor of any proposal to adjourn or postpone the Parent Stockholder Meeting to a later date if there are not a quorum or sufficient votes for approval of such matters on the date on which the Parent Stockholder Meeting is held to vote upon any of the foregoing matters, (B) against any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of Parent contained in the Merger Agreement or of such Stockholder contained in this Agreement, and (C) against any Acquisition Proposal or Superior Proposal and against any other action, agreement or transaction involving Parent or any of its Subsidiaries that would reasonably be expected to materially impede, interfere with, delay, postpone, adversely affect or otherwise materially adversely affect or prevent the consummation of the Merger or the other transactions contemplated by the Merger Agreement or the performance by Parent of its obligations under the Merger Agreement or by such Stockholder of its obligations under this Agreement. |
| (b) | Each Stockholder hereby agrees (i) not to commence or participate in and (ii) to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against Parent, Merger Sub, the Company, SpinCo or any of their respective Affiliates relating to the negotiation, execution or delivery of this Agreement or the Merger Agreement or the consummation of the transactions contemplated hereby or thereby, including any claim (A) challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement or (B) alleging a breach of any fiduciary duty of the Board of Directors of Parent in connection with this Agreement, the Merger Agreement or the transactions contemplated hereby or thereby. |
| (c) | The obligations of each Stockholder specified in this Section 2.01 shall apply whether or not the Parent Share Issuance, the Parent Charter Amendment or any action described above is recommended by the Board of Directors of Parent (or any committee thereof). |
| (a) | (i) Such Stockholder’s Existing Shares are, and all of the Covered Shares Beneficially Owned by such Stockholder from the date hereof through and at the Expiration Time will be, Beneficially Owned by such Stockholder and (ii) such Stockholder has good and valid title to such Stockholder’s Existing Shares, free and clear of any Liens other than (x) pursuant to this Agreement, under applicable federal or state securities laws or pursuant to any written policies of Parent only with respect to restrictions upon the trading of securities under applicable securities laws or (y) Liens that would not, individually or in the aggregate, impair such Stockholder’s ability to comply with its obligations under this Agreement. |
| (b) | As of the date hereof, such Stockholder’s Existing Shares constitute all of the shares of Parent Common Stock (or any other equity interests of Parent) Beneficially Owned by such Stockholder and all of the shares of Parent Common Stock (or any other equity interests of Parent) owned of record by such Stockholder. No proxies, powers of attorney, instructions or other requests given by such Stockholder prior to the execution of this Agreement in respect of the voting of such Stockholder’s Covered Shares, if any, are irrevocable. |
| (c) | Unless Transferred pursuant to a Permitted Transfer, after giving effect to the revocation contemplated by the last sentence of Section 2.02, such Stockholder has and will have at all times through the Expiration Time sole voting power (including the right to control such vote as contemplated herein), sole power of disposition, sole power to issue instructions with respect to the matters set forth in Article 2, and sole power to agree to all of the matters set forth in this Agreement, in each case with respect to all of such Stockholder’s Existing Shares and with respect to all of the Covered Shares Beneficially Owned by such Stockholder at all times through the Expiration Time. References to ‘‘sole’’ in this Section 3.02(c) mean, in the case of the Faiveley Entities, ‘‘sole or joint’’, provided that in the case of joint voting power the fact that it is joint will not prevent the Faiveley Entities from complying with the terms of this Agreement. |
| (a) | Subject to the provisions of Section 5.02 of this Agreement, prior to the Expiration Time, each Stockholder (severally and not jointly) agrees that it shall not, and shall cause each of its Subsidiaries, Affiliates and Representatives (it being understood that the Company will not deemed to be a Subsidiary, Affiliate or Representative of any of the Stockholders for purposes of this Section 4.03) not to, directly or indirectly, (i) initiate, solicit, knowingly encourage or knowingly facilitate inquiries or proposals with respect to any Acquisition Proposal, (ii) engage or participate in any negotiations with any person concerning any Acquisition Proposal, (iii) provide any confidential or nonpublic information or data to, or have or participate in any discussions with, any person relating to any Acquisition Proposal, (iv) make or participate in, directly or indirectly, a ‘‘solicitation’’ of ‘‘proxies’’ (as such terms are used in the rules of the SEC) or powers of attorney or similar rights to vote, or seek to advise or influence any Person, with respect to the voting of any shares of Parent Common Stock in connection with any vote or other action on any matter, other than to recommend that the stockholders of Parent vote in favor of the approval of the Parent Share Issuance and the Parent Charter Amendment as otherwise expressly provided in this Agreement, (v) approve, adopt, recommend or enter into, or publicly propose to approve, adopt, recommend or enter into, or allow any of its Affiliates to enter into, a merger agreement, letter of intent, term sheet, agreement in principle, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement, voting, profit capture, tender or other similar contract providing for, with respect to, or in connection with, or that is intended to or could reasonably be expected to result in any Acquisition Proposal, or (vi) agree or propose to do any of the foregoing. Each Stockholder (severally and not jointly) and its Subsidiaries, Affiliates and Representatives shall immediately cease and cause to be terminated all discussions or negotiations with any Person conducted heretofore (other than with the Company) with respect to any Acquisition Proposal, and shall take the necessary steps to inform its Affiliates and Representatives of the obligations undertaken pursuant to this Agreement, including this Section 4.03. Any violation of this Section 4.03 by any such Stockholder’s Affiliates or Representatives shall be deemed to be a violation by such Stockholder of this Section 4.03. Each Stockholder (severally and not jointly) agrees to promptly (and in any event within the next Business Day) notify the Company after receipt of an Acquisition Proposal. |
| (b) | For the avoidance of doubt, for the purposes of this Section 4.03, any officer, director, employee, agent or advisor of Parent (in each case, in their capacities as such) shall be deemed not to be a Representative of any Stockholder. |
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General Electric Company
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33-41 Farnsworth Street
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Boston, MA 02210
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Attention: James M. Waterbury
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Facsimile:
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+44 207302 6834
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E-mail:
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jim.waterbury@ge.com
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Davis Polk & Wardwell LLP
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450 Lexington Avenue
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New York, New York 10017
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Attention:
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William L. Taylor
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Lee Hochbaum
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Facsimile:
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(212) 701-5133
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(212) 701-5736
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E-mail:
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william.taylor@davispolk.com
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lee.hochbaum@davispolk.com
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| (a) | This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law rules of such state. |
| (b) | The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby (whether brought by any party or any of its Affiliates or against any party or any of its Affiliates) shall be brought in the Delaware Chancery Court or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 5.04 shall be deemed effective service of process on such party. |
| (c) | EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. |
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GENERAL ELECTRIC COMPANY
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By:
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/s/ Aris Kekedjian
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Name:
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Aris Kekedjian
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Title:
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Vice-President
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STOCKHOLDER
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By:
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/s/Erwan Faiveley
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||
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Name:
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Erwan Faiveley, on behalf of himself
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||
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And for and on behalf of
|
|
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FINANCIÉRE FAIVELEY S.A.,
|
|
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as its President
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And
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FAMILLE FAIVELEY PARTICIPATION
S.A.S., |
|
|
as its President
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STOCKHOLDER
|
||
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By:
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/s/ Emilio A. Fernandez
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|
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Name: Emilio A. Fernandez
|
||
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STOCKHOLDER
|
||
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By:
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/s/ David L. DeNinno
|
|
|
Name: David L. DeNinno
|
||
|
STOCKHOLDER
|
||
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By:
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/s/ Lee B. Foster
|
|
|
Name: Lee B. Foster
|
||
|
STOCKHOLDER
|
||
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By:
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/s/ William Kassling
|
|
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Name: William Kassling
|
||
|
STOCKHOLDER
|
||
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By:
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/s/ Albert Neupaver
|
|
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Name: Albert Neupaver
|
||
|
STOCKHOLDER
|
||
|
By:
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/s/ Philippe Alfroid
|
|
|
Name: Philippe Alfroid
|
||
|
STOCKHOLDER
|
||
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By:
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/s/ Patrick D. Dugan
|
|
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Name: Patrick D. Dugan
|
||
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STOCKHOLDER
|
|||
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By:
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/s/ Stéphane Rambaud-Measson
|
||
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Name:
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Stéphane Rambaud-Measson
|
||
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Title:
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COO
|
||
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STOCKHOLDER
|
||
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By:
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/s/ Brian Hehir
|
|
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Name: Brian Hehir
|
||
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STOCKHOLDER
|
||
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By:
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/s/ Robert J. Brooks
|
|
|
Name: Robert J. Brooks
|
||
|
STOCKHOLDER
|
||
|
By:
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/s/ Scott E. Wahlstrom
|
|
|
Name: Scott E. Wahlstrom
|
||
|
STOCKHOLDER
|
||
|
By:
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/s/ Michael W. D. Howell
|
|
|
Name: Michael W. D. Howell
|
||
|
STOCKHOLDER
|
||
|
By:
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/s/ Raymond T. Betler
|
|
|
Name: Raymond T. Betler
|
||
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STOCKHOLDER
|
||
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By:
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/s/ Linda S. Harty
|
|
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Name: Linda S. Harty
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||
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Beneficial Owner
|
Number of Existing
Shares of Parent Common Stock |
Address for Notice
|
|
Raymond T. Betler
|
187744
|
All notices should be sent to the relevant parties identified for all notices to be sent to Parent under the Merger Agreement, as provided in Section 11.01 thereof.
|
|
Patrick D. Dugan
|
75,295
|
|
|
Stéphanie Rambaud-Measson
|
16,000
|
|
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David L. DeNinno
|
65,888
|
|
|
Scott E. Wahlstrom
|
125,725
|
|
|
Albert J. Neupaver
|
683,475
|
|
|
Philippe Alfroid
|
3,380
|
|
|
Robert J. Brooks
|
472,145
|
|
|
Erwan Faiveley
|
3,898(1)
|
|
|
Financiére Faiveley S.A. Famille Faiveley Participations
|
6,305,582(2)
|
|
|
Emilio A. Fernandez
|
1,388,370.54
|
|
|
Lee B. Foster, II
|
70,106
|
|
|
Linda S. Harty
|
6,254
|
|
|
Brian P. Hehir
|
29,524.54
|
|
|
Michael W.D. Howell
|
5,650.17
|
|
|
William E. Kassling
|
1,205,378.20
|
| (1) | For purposes of this Agreement, Erwan Faiveley will not be deemed to Beneficially Own any of the 6,305,582 Existing Shares attributed to Financiére Faiveley S.A. and Famille Faiveley Participations S.A.S. in this table (or any Covered Shares arising therefrom). |
| (2) | For purposes of this Agreement, Financiére Faiveley S.A. and Famille Faiveley Participations S.A.S. will not be deemed to Beneficially Own any of the 3,034 Existing Shares attributed by Erwan Faiveley in this table (or any Covered Shares arising therefrom). |
| (a) | acquire, offer to acquire or agree to acquire, by purchase or otherwise, Beneficial Ownership of Common Shares or any other security, including any cash-settled option or other derivative security that transfers all or any portion of the economic benefits or risks of the ownership of Common Shares to any Person, other than the acquisition of any Additional Shares; |
| (b) | make any statement or proposal to the Company or any of the Company’s stockholders regarding, or make any public announcement, proposal or offer (including any ‘‘solicitation’’ of ‘‘proxies’’ as such terms are defined or used in Regulation 14A of the 1934 Act) with respect to, or otherwise solicit or effect, or seek or offer or propose to effect (whether directly or indirectly, publicly or otherwise) (i) any business combination, merger, tender offer, exchange offer or similar transaction involving the Company or any of its Subsidiaries that may reasonably be expected to result in a Change of Control, (ii) any restructuring, recapitalization, liquidation, dissolution or similar transaction involving the Company or any of its Subsidiaries, including any material divestiture, break-up or spinoff, (iii) any acquisition of any equity securities of the Company or any of its Subsidiaries or rights or options to acquire interests in the equity securities of the Company or any of its Subsidiaries, or (iv) the composition of or election of any individual to the Board, except as permitted by this Agreement (and as may be required by applicable Law in connection therewith); |
| (c) | enter into any discussions, negotiations, arrangements or understandings with any third Person with respect to the actions prohibited by Section 2.2(a) or Section 2.2(b), or form, join or participate in a ‘‘group’’ (within the meaning of Section 13(d)(3) of the 1934 Act) with respect to the Common Shares in connection with any of the actions prohibited by Section 2.2(a) or Section 2.2(b); |
| (d) | request, call or seek to call a meeting of the stockholders of the Company, nominate any individual for election as a director of the Company at any meeting of stockholders of the Company, submit any stockholder proposal (pursuant to Rule 14a-8 promulgated under the 1934 Act or otherwise) to seek representation on the Board or any other proposal to be considered by the stockholders of the Company, or recommend that any other Company stockholders vote in favor of, or otherwise publicly comment favorably or unfavorably about, or solicit votes or proxies for, any such nomination or proposal submitted by another stockholder of the Company, or otherwise publicly seek to control or influence the Board, management or policies of the Company; |
| (e) | deposit any Subject Shares or any other Common Shares in a voting trust or similar arrangement or subject any Subject Shares or any other Common Shares to any voting agreement, pooling arrangement or similar arrangement (in each case other than as contemplated in this Agreement or solely among a group comprised solely of the Shareholder Parties and their respective controlled Affiliates); or |
| (f) | take any action which would reasonably be expected to require the Company to make a public announcement regarding (including any public filing) any of the actions prohibited by this Section 2.2; |
| (i) | within a period of 90 calendar days after the date of delivery of any other Registration Request pursuant to this Section 4.1; |
| (ii) | during such time as the Shareholder Parties may sell Registrable Securities, in accordance with the intended method of distribution stated in the Registration Request, pursuant to a Shelf Registration Statement under Section 4.3; |
| (iii) | on a total of more than three occasions in any calendar year (if, on each such occasion, the registration shall have been deemed to have been effected in accordance with Section 4.1(b) of this Agreement); |
| (iv) | in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance, unless the Company is already subject to service of process in such jurisdiction and except as may be required by the 1933 Act; or |
| (vi) | if the Shareholder Parties proposes to dispose of Registrable Securities that may be registered at such time pursuant to a Registration Statement contemplated in Section 4.2. |
| (b) | A registration requested pursuant to this Section 4.1 will not be deemed to have been effected unless the Registration Statement has become effective; provided, however, that if, within the period ending on the earlier to occur of (i) 90 days after the applicable Registration Statement has become effective (provided, that such period will be extended for a period of time equal to the period the holder of Registrable Securities refrains from selling any securities included in such Registration Statement at the request of the Company or the lead managing underwriter(s) pursuant to the provisions of this Agreement) and (ii) the date on which the distribution of the securities covered thereby has been completed, the offering of securities pursuant to such Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or other Governmental Authority, such Registration Statement will be deemed not to have been effected; provided, further, that if the requesting Shareholder Parties, after exercising their right to request a registration pursuant to this Section 4.1 withdraw from a registration so requested after the filing thereof, such registration will be deemed to have been effective with respect to the Shareholder Parties in accordance with this Section 4.1. |
| (c) | Subject to Section 4.2, if, within five Business Days of the Company’s receipt of a Registration Request, the requesting Shareholder Parties are advised in writing (the ‘‘Underwriter’s Advice’’) that the Company has in good faith commenced the preparation of a Registration Statement for an underwritten Public Offering in which the Shareholder Parties received a Piggyback Notice in accordance with this Agreement prior to receipt by the Company of such Registration Request and the managing underwriter of the proposed Public Offering has determined that, in such firm’s judgment, a registration at the time and on the terms requested would materially and adversely affect such underwritten Public Offering, then the Company will not be required to effect such requested registration pursuant to this Section 4.1 until the earliest of: |
| (i) | the abandonment of such underwritten Public Offering by the Company; |
| (ii) | 45 days after receipt of the Underwriter’s Advice by the Shareholder Parties, unless the Registration Statement for such offering has become effective and such Public Offering has commenced on or prior to such 45th day; and |
| (iii) | if the Registration Statement for such Public Offering has become effective and such Public Offering has commenced on or prior to such 45th day, the day on which the restrictions on the Shareholder Parties contained in the related lock-up agreement lapse with respect to such Public Offering. |
| (d) | The Company may postpone the filing or effectiveness of any Registration Statement and suspend the Shareholder Parties’ use of any prospectus which is a part of the Registration Statement (in which event the Shareholder Parties will discontinue sales of the Registrable Securities pursuant to the Registration Statement) for a period of up to an aggregate of 60 days, and no more than once, in any 365-day period, exclusive of days covered by any lock-up agreement executed by the Shareholder Parties in connection with any underwritten Public Offering after the request for registration pursuant to this Section 4.1 if the Company delivers to the Shareholder Parties a certificate signed by either the chief executive officer or the chief financial officer of the Company certifying that the conditions constituting a Material Disclosure Event exist at such time. |
| (e) | The Company will have the right to cause the registration of additional securities for sale for the account of any Person other than the Shareholder Parties (including the Company) in any registration requested pursuant to this Section 4.1 to the extent the managing underwriter or other independent marketing agent for such offering (if any) determines that, in its judgment, the additional securities proposed to be sold will not materially and adversely affect the offering and sale of the Registrable Securities to be registered, and otherwise to the extent required by the Faiveley Registration Rights, in accordance with the intended method or methods of disposition then contemplated by such registration requested pursuant to this Section 4.1. |
| (b) | Any time a registration requested pursuant to this Section 4.1 involves an underwritten Public Offering, the requesting Shareholder Parties will, after consultation in good faith with the Company, select the investment banker(s) and manager(s) that will serve as managing underwriters (including which such managing underwriters will serve as lead or co-lead) and underwriters with respect to the offering of such Registrable Securities; provided, that such investment banker(s) and manager(s) are reasonably acceptable to the Company (such acceptance not to be unreasonably withheld, conditioned or delayed). |
| (c) | If a holder of Registrable Securities makes a Registration Request that comprises an offer to exchange Registrable Securities for any securities issued by it or any other Person (an ‘‘Exchange Offer Registration’’), the Company shall effect the registration of such offer to exchange on Form S-4 or any similar successor form under the Securities Act for such Exchange Offer Registration. |
| (b) | If the managing underwriter or underwriters of a proposed underwritten offering advise the Company and the holders of such Registrable Securities that, in their judgment, because of the size of the offering which the Shareholder Parties, the Company and/or such other Persons (as applicable) intend to make, the success of the offering would be materially and adversely affected by inclusion of the number of Registrable Securities requested to be included (taking into account, in addition to any considerations that the managing underwriter or underwriters reasonably deem relevant, the timing and manner to effect the offering), then the number of Registrable Securities to be offered for the account of the Shareholder Parties shall be reduced to the extent necessary (i) to reduce the total amount of securities to be included in such offering to the amount recommended by such managing underwriter or underwriters or (ii) to the extent necessary to comply with the requirements of the Faiveley Registration Rights; provided that if Common Shares are being offered for the account of Persons other than the Company, then the Common Shares intended to be offered for the account of such other Persons shall, except to the extent not permitted by the Faiveley Registration Rights, be reduced pro rata to the extent necessary to permit the Shareholder Parties to include all of its Registrable Securities in such offering. |
| (b) | Subject to Section 4.1(d), the Company will use reasonable best efforts to keep the Shelf Registration Statement continuously effective, including by renewing the Shelf Registration Statement, until the earlier of (i) three years after the Shelf Registration Statement first becomes effective and (ii) the date on which all Registrable Securities covered by the Shelf Registration Statement have been sold thereunder in accordance with the plan and method of distribution disclosed in the prospectus included in the Shelf Registration Statement, or otherwise cease to be Registrable Securities. |
| (c) | The Company will be entitled, from time to time, by providing written notice to the holders of Registrable Securities who elected to participate in the Shelf Registration Statement, to require such holders of Registrable Securities to suspend the use of the prospectus for sales of Registrable Securities under the Shelf Registration Statement for a period of up to an aggregate of 60 calendar days, and no more than once, in any 365-day period, exclusive of days covered by any lock-up agreement executed by the Shareholder Parties in connection with any underwritten Public Offering if the Company delivers to the Shareholder Parties a certificate signed by either the chief executive officer or the chief financial officer of the Company certifying that the conditions constituting a Material Disclosure Event exist at such time. Following the earlier of (i) the termination of the conditions constituting a Material Disclosure Event and (ii) 60 calendar days following delivery of the notice certifying the existence of a Material Disclosure Event, without any further request from a holder of Registrable Securities, the Company to the extent necessary will use reasonable best efforts to, as expeditiously as possible, prepare a post-effective amendment or supplement to the Shelf Registration Statement or the prospectus, or any document incorporated therein by reference, or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, the prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. |
| (d) | At any time that a Shelf Registration Statement is effective, if any Shareholder Party holding Registrable Securities delivers a notice to the Company (a ‘‘Take-Down Notice’’) stating that it intends to sell all or part of its Registrable Securities included by it on the Shelf Registration Statement in an underwritten Public Offering (a ‘‘Shelf Offering’’), then, the Company will, as expeditiously as possible, amend or supplement the Shelf Registration Statement as may be necessary in order to enable such Registrable Securities to be distributed pursuant to the Shelf Offering (taking into account the inclusion of securities pursuant to the Faiveley Registration Rights). In connection with any Shelf Offering that is an underwritten Public Offering and where the plan of distribution set forth in the Take-Down Notice includes a customary ‘‘road show’’ (including an ‘‘electronic road show’’) involving substantial marketing efforts by Wabtec and the underwriters (a ‘‘Marketed Underwritten Shelf Offering’’): |
| (i) | Wabtec will forward the Take-Down Notice to all other Persons, if any, included on the Shelf Registration Statement pursuant to the Faiveley Registration Rights and Wabtec will permit each such Person to include its securities included on the Shelf Registration Statement in the Marketed Underwritten Shelf Offering if such holder notifies Wabtec within five days after delivery of the Take-Down Notice to such Person; and |
| (ii) | if the managing underwriter(s) advises the Company and the holders of Registrable Securities that, in its opinion, the inclusion of all of the securities sought to be sold in connection with such Marketed Underwritten Shelf Offering would materially and adversely affect the success thereof, then there will be included in such Marketed Underwritten Shelf Offering only such securities as is advised by such lead managing underwriter(s) can be sold without such effect, and such number of Registrable Securities shall be allocated in the same manner as described in Section 4.2(b). |
| (a) | before filing a Registration Statement (which for purposes of this Section 4.4 includes any Shelf Registration Statement) or any amendments or supplements thereto, the Company will furnish to the Shareholder Parties and their respective Representatives copies of all such documents proposed to be |
| (b) | subject to terms and conditions of this Article IV, the Company will prepare and file with the SEC a Registration Statement with respect to such Registrable Securities on any form for which the Company then qualifies or which counsel for the Company in good faith deems appropriate and which form will be available for the sale of such Registrable Securities in accordance with the intended methods of distribution thereof, use its best efforts to cause such Registration Statement to become and remain effective for the period referred to accordance with this Article IV and comply with the provisions of the 1933 Act with respect to the disposition of all securities covered by such Registration Statement; |
| (c) | the Company will prepare and file with the SEC or other Governmental Authority having jurisdiction such amendments and supplements to such Registration Statement as may be necessary to keep such Registration Statement effective continuously for the period referred to in accordance with this Article IV; |
| (d) | if requested by the managing underwriter(s), if any, or any Shareholder Party, the Company will promptly prepare a prospectus supplement or post-effective amendment and include in such prospectus supplement or post-effective amendment such information as the lead managing underwriter(s), if any, and any Shareholder Party may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such prospectus supplement or such post-effective amendment as expeditiously as possible after the Company has received such request; |
| (e) | the Company will furnish to the managing underwriter(s), if any, and the Shareholder Parties such number of copies, without charge, of such Registration Statement, each amendment and supplement thereto, including each preliminary prospectus, final prospectus, any other prospectus (including any prospectus filed under Rule 424, Rule 430A or Rule 430B under the 1933 Act and any ‘‘issuer free writing prospectus’’ as such term is defined under Rule 433 promulgated under the 1933 Act), all exhibits and other documents filed therewith and such other documents as any Shareholder Party may reasonably request including in order to facilitate the disposition of its Registrable Securities; |
| (f) | the Company will register or qualify such Registrable Securities under such other securities or blue sky Laws of such jurisdictions as any Shareholder Party or managing underwriter(s), if any, reasonably requests and do any and all other acts and things that may be reasonably necessary or reasonably advisable to enable each Shareholder Party to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Shareholder Party, provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction; |
| (g) | the Company will notify the Shareholder Parties at any time when a prospectus relating to the Registrable Securities is required to be delivered under the 1933 Act, upon discovery that, or upon the discovery of the happening of any event as a result of which, the prospectus contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and, as soon as reasonably practicable, prepare and furnish to the Shareholder Parties a reasonable number of copies of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made; |
| (h) | the Company will notify the Shareholder Parties (i) when such Registration Statement or the prospectus or any prospectus supplement or post-effective amendment has been filed and, with respect to such Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or other Governmental Authority for amendments or supplements to such |
| (i) | the Company will cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed, if applicable; |
| (j) | the Company will provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such Registration Statement; |
| (k) | the Company will make available for inspection by the Shareholder Parties and their counsel, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by any Shareholder Party or any underwriter, all financial and other books and records, pertinent corporate documents and documents relating to the business of the Company and customarily provided in a secondary offering, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any Shareholder Party or any underwriter, attorney, accountant or agent in connection with such Registration Statement, provided that it will be a condition to such inspection and receipt of such information that the inspecting Person (i) enter into a confidentiality agreement in form and substance reasonably satisfactory to the Company and (ii) agree to use commercially reasonable efforts to minimize the disruption to the Company’s business in connection with the foregoing; |
| (l) | the Company will, if requested, obtain a ‘‘comfort’’ letter or letters from the Company’s independent public accountants in customary form and covering matters of the type customarily covered by ‘‘comfort’’ letters as any Shareholder Party reasonably requests; |
| (m) | the Company will, if requested, obtain a legal opinion and ‘‘10b-5’’ disclosure letter of the Company’s outside counsel in customary form and covering such matters of the type customarily covered by legal opinions or ‘‘10b-5’’ disclosure letters of such nature and reasonably satisfactory to the requesting Shareholder Party, which opinion or ‘‘10b-5’’ disclosure letter will be addressed to any underwriters and such Shareholder Party; |
| (n) | the Company will, if applicable, reasonably cooperate with the Shareholder Parties and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the Financial Industry Regulatory Authority, and any other agencies or authorities as may be reasonably necessary to enable the Shareholder Parties to consummate the disposition of such Registrable Securities; |
| (o) | the Company will enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings) and use its reasonable best efforts to take all such other actions reasonably requested by any Shareholder Party therewith (including those reasonably requested by the managing underwriter(s), if any) to expedite or facilitate the disposition of such Registrable Securities, and in such connection, whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten Public Offering, (i) make such representations and warranties to the Shareholder Parties and the underwriters, if any, with respect to the business of the Company, and the Registration Statement, prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers in underwritten offerings, and, if true, confirm the same if and when requested, (ii) to the extent an underwriting agreement or similar agreement is entered into, provide an indemnity to the Shareholder Parties and the underwriters in form, scope and substance as is customary in underwritten offerings, and (iii) deliver such documents and certificates as reasonably requested by any Shareholder Party and the lead managing underwriters(s), if any, to evidence the continued validity of the representations and warranties made pursuant to sub-clause (i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company, in each case as and to the extent required thereunder; |
| (p) | the Company will use reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement filed pursuant to this Article IV, or the lifting of any |
| (q) | the Company will endeavor in good faith to have appropriate officers of the Company prepare and make presentations at a reasonable and customary number of ‘‘road shows’’ and before analysts and rating agencies, as the case may be, and other information meetings reasonably organized by the underwriters and otherwise use reasonable best efforts to cooperate as reasonably requested by the Shareholder Parties and the underwriters in the offering, marketing or selling of the Registrable Securities. |
| (b) | Each Shareholder Party agrees that, in connection with any registration hereunder, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4.4(g), such Shareholder Party will forthwith discontinue the disposition of its Registrable Securities pursuant to the Registration Statement until such Shareholder Party receives copies of a supplemented or amended prospectus as contemplated by such Section 4.4(g). In the event the Company gives any such notice, the applicable time period during which a Registration Statement is to remain effective under this Article IV shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to this Section 4.7(b) to and including the date on which the Shareholder Parties will have received the copies of the supplemented or amended prospectus contemplated by Section 4.4(g). |
| (b) | If any Shareholder Party notifies the Company in writing that it intends to effect an underwritten sale under a Shelf Registration Statement pursuant to this Article IV, the Company shall not effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for its equity securities (other than pursuant to registrations on Form S-4 or Form S-8 or any successor form or to the extent required pursuant to the Faiveley Registration Rights), without the prior written consent of the managing underwriter(s) during such period as may be required by the managing underwriter(s); provided, that in no event shall such period exceed more than 60 days following the date of the prospectus used in connection with such offering). |
| (b) | In connection with any Registration Statement or Shelf Registration Statement in which a Shareholder Party is participating the Shareholder shall indemnify the Company, its directors and officers, and each Person who controls (within the meaning of Section 15 of the 1933 Act and Section 20 of the 1934 Act) the Company, from and against all Losses, as incurred, arising out of, caused by, resulting from or relating to any untrue statement (or alleged untrue statement) of material fact contained in the Registration Statement or Shelf Registration Statement, or any prospectus or preliminary prospectus or issuer free writing prospectus or any amendment or supplement thereto or any omission (or alleged omission) of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (without limitation of the preceding portions of this Section 4.9(b)) will reimburse the Company, its directors and officers and each Person who controls the Company (within the meaning of Section 15 of the 1933 Act and Section 20 of the 1934 Act) for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such claim, Loss, damage, liability or action, in each case |
| (c) | Any Person entitled to indemnification hereunder will give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification; provided, however, the failure to give such notice will not release the indemnifying party from its obligation, except to the extent that the indemnifying party has been actually and materially prejudiced by such failure to provide such notice on a timely basis. |
| (d) | In any case in which any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and, to the extent that it may wish, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and acknowledging the obligations of the indemnifying party with respect to such proceeding, the indemnifying party will not (so long as it shall continue to have the right to defend, contest, litigate and settle the matter in question in accordance with this paragraph) be liable to such indemnified party hereunder for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation, supervision and monitoring (unless (i) such indemnified party reasonably objects to such assumption on the grounds that there may be defenses available to it which are different from or in addition to the defenses available to such indemnifying party and, as a result, a conflict of interest exists or (ii) the indemnifying party will have failed within a reasonable period of time to assume such defense and the indemnified party is or would reasonably be expected to be materially prejudiced by such delay, in either event the indemnified party will be promptly reimbursed by the indemnifying party for the reasonable expenses incurred in connection with retaining one separate legal counsel (for the avoidance of doubt, for all indemnified parties in connection therewith)). For the avoidance of doubt, notwithstanding any such assumption by an indemnifying party, the indemnified party will have the right to employ separate counsel in any such matter and participate in the defense thereof, but the fees and expenses of such counsel will be at the expense of such indemnified party except as provided in the previous sentence. An indemnifying party will not be liable for any settlement of an action or claim effected without its consent (which consent shall not be unreasonably withheld, conditioned or delayed). No matter may be settled by an indemnifying party without the consent of the indemnified party (which consent shall not be unreasonably withheld, conditioned or delayed), unless such settlement (i) includes as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation, (ii) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any indemnified party and (iii) does not involve any injunctive or equitable relief that would be binding on the indemnified party or any payment that is not covered by the indemnification hereunder. |
| (e) | The indemnification provided for under this Agreement shall survive the disposal of the Registrable Securities and the termination of this Agreement. |
|
(a)
|
If to the Company, to:
|
|||
|
Westinghouse Air Brake Technologies Corporation
|
||||
|
1001 Air Brake Avenue
|
||||
|
Wilmerding, Pennsylvania
|
||||
|
Attention: David L. DeNinno
|
||||
|
Facsimile No.: (412) 825-1305
|
||||
|
E-mail: ddeninno@wabtec.com
|
||||
|
With a copy to:
|
||||
|
Jones Day
|
||||
|
250 Vesey Street
|
||||
|
New York, New York 10281
|
||||
|
Attention:
|
Robert A. Profusek
|
|||
|
Peter E. Izanec
|
||||
|
Facsimile No.:
|
(212) 755-7306
|
|||
|
E-mail:
|
raprofusek@jonesday.com
|
|||
|
peizanec@jonesday.com
|
||||
|
(b)
|
If to the Shareholder:
|
|||
|
General Electric Company
|
||||
|
33-41 Farnsworth Street
|
||||
|
Boston, MA 02210
|
||||
|
Attention: James M. Waterbury
|
||||
|
Facsimile No.: +44 2073026834
|
||||
|
E-mail: jim.waterbury@ge.com
|
||||
|
With a copy to:
|
||||
|
Davis Polk & Wardwell LLP
|
||||
|
450 Lexington Avenue
|
||||
|
New York, New York 10017
|
||||
|
Attention:
|
William L. Taylor
|
|||
|
Lee Hochbaum
|
||||
|
Facsimile No.:
|
(212) 701-5800
|
|||
|
E-mail:
|
william.taylor@davispolk.com
|
|||
|
lee.hochbaum@davispolk.com
|
||||
| (b) | The Parties agree that any litigation, suit, proceeding, or action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby (whether brought by any Party or any of its Affiliates or against any Party or any of its Affiliates) shall be brought in the Delaware Chancery Court or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court, and each of the Parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such litigation, suit, proceeding, or action and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such litigation, suit, proceeding, or action in any such court or that any such litigation, suit, proceeding, or action brought in any such court has been brought in an inconvenient forum. Process in any such litigation, suit, proceeding, or action may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each Party agrees that service of process on such party as provided in Section 5.3 shall be deemed effective service of process on such Party. |
| (c) | EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. |
|
WESTINGHOUSE AIR BRAKE
TECHNOLOGIES CORPORATION |
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
GENERAL ELECTRIC COMPANY
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
| (a) | As of the applicable Employment Commencement Date, |
| (i) | (A) SpinCo shall, or shall cause a SpinCo Group Member to, continue to employ each Tiger Employee who immediately prior to such Employment Commencement Date was employed by a SpinCo Group Member, and (B) Direct Sale Purchaser shall cause a Direct Sale Transferred Subsidiary to continue to employ each Tiger Employee who immediately prior to such Employment Commencement Date was employed by such Direct Sale Transferred Subsidiary; |
| (ii) | SpinCo and Direct Sale Purchaser shall, or shall cause their respective Subsidiaries to, accept the automatic transfer and continue the employment of the Automatically Transferring Tiger Employees as successor employers; |
| (iii) | Direct Sale Purchaser shall, or shall cause one of its Subsidiaries to, offer employment to each Offer Employee who is not an Inactive Offer Employee; |
| (iv) | Direct Sale Purchaser shall, or shall cause one of its Subsidiaries to, offer employment to each Inactive Offer Employee, provided that, not later than the later of (i) twelve (12) months after the Distribution Date or (ii) such longer period as required by Applicable Law, such Inactive Offer Employee presents himself or herself to Direct Sale Purchaser or its applicable Subsidiary as able to commence active employment with Direct Sale Purchaser or such Subsidiary and actually commences such employment by such date. |
| (b) | Census. Prior to the execution of the Merger Agreement, the Company provided to Parent a true and complete census (the ‘‘Employee Census’’), as of the date provided, of all (i) employees of a SpinCo Group Member, (ii) employees of a Direct Sale Transferred Subsidiary, (iii) Automatically Transferring Tiger Employees, and (iv) Offer Employees, with each individual identified by name (where permitted by Applicable Law), employee identification number, employing entity, location, title and active or inactive status. The Company shall provide to Parent between ten (10) Business Days and fifteen (15) Business Days prior to the Distribution Date an updated version of the Employee Census, which shall be true and complete as of the date provided, and which shall (A) reflect employment terminations and new hires and transfers and (B) identify whether each individual is employed by a Tiger Group Member, is an Automatically Transferring Tiger Employee, or is an Offer Employee (separately identifying whether any such individual is in the Company Corporate Rotational Program). Prior to the Distribution Date the Company may only add individuals to the Employee Census (x) who are hired or transferred in the ordinary course of business consistent with past practice either (I) to replace individuals who were removed from the Employee Census due to employment terminations or (II) as manufacturing or production employees or (y) with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed). |
| (a) | Generally. During the applicable Continuation Period, while employed by SpinCo, Parent, Direct Sale Purchaser, any Direct Sale Transferred Subsidiary or any of their respective Affiliates, each Continuing Employee shall be entitled to receive from Parent, SpinCo, Direct Sale Purchaser, any Direct Sale Transferred Subsidiary or one of their respective Affiliates: |
| (i) | at least the same salary or wages, same cash incentive compensation opportunities and same cash bonus opportunities as were provided to such Continuing Employee immediately prior to the Distribution Effective Time; |
| (ii) | employee benefits having a comparable aggregate employer-provided value (including the value of tax qualified and non-tax qualified defined benefit plans and retiree health benefits) to those provided to such Continuing Employee by the Company and its Affiliates immediately prior to the Distribution Effective Time; provided, that for purposes of this covenant, stock options and other equity awards shall be disregarded, except as otherwise required by Applicable Law; and |
| (iii) | to the extent required by Applicable Law or a Transferring Arrangement, other material terms and conditions of employment as were provided to such Continuing Employee immediately prior to the Distribution Effective Time, subject to the terms and conditions of this ARTICLE II. |
| (b) | Bonuses. As of the Distribution Effective Time, SpinCo, Direct Sale Purchaser and each Direct Sale Transferred Subsidiary shall, or shall cause one of their respective Affiliates to, honor all obligations of the Company and its Affiliates to each Continuing Employee pursuant to any cash incentive or bonus program covering such Continuing Employee as of the Distribution Effective Time. SpinCo, Direct Sale Purchaser and each Direct Sale Transferred Subsidiary shall, or shall cause one of their respective Affiliates to, pay Continuing Employees cash incentives or bonuses for the entire applicable performance measurement period which includes the Distribution Effective Time in accordance with such programs. |
| (c) | Vacation and Paid Time Off. SpinCo, Direct Sale Purchaser and each Direct Sale Transferred Subsidiary shall, or shall cause one of their respective Affiliates to, provide vacation benefits to Continuing Employees for so long as they are employed with SpinCo, Direct Sale Purchaser, any Direct Sale Transferred Subsidiary or one of their respective Affiliates that are at least as favorable as those provided to Continuing Employees under the applicable vacation program of the Company or its Affiliates immediately prior to the Distribution Effective Time. Effective as of the Distribution Effective Time, SpinCo, Direct Sale Purchaser and each Direct Sale Transferred Subsidiary shall, or shall cause one of their respective Affiliates to, honor all obligations of the Company, SpinCo and their respective Affiliates for the accrued, unused vacation and paid time off as of the Distribution Effective Time for Continuing Employees. |
| (d) | Severance Benefits. SpinCo, Direct Sale Purchaser and each Direct Sale Transferred Subsidiary shall, or shall cause one of their respective Affiliates to, provide severance benefits to any Continuing Employee who is laid off or terminated by SpinCo, Direct Sale Purchaser, any Direct Sale Transferred Subsidiary or any of their respective Affiliates during the applicable Continuation Period in an amount that is equal to the greater of (i) the severance benefits that the Continuing Employee would have been entitled to pursuant to the terms of any Tiger Benefit Plan or severance and/or layoff plan of the Company or its Affiliates, as applicable, as would have applied to such Continuing Employee immediately prior to the Distribution Effective Time, or (ii) the severance benefits provided under the severance arrangements of Parent, SpinCo, Direct Sale Purchaser, any Direct Sale Transferred Subsidiary or one of their respective Affiliates applicable to similarly-situated employees, in either case to be calculated on the basis of the Continuing Employee’s compensation and service at the time of the layoff or other termination. Severance benefits shall be administered under the terms of the applicable severance plan of Parent, SpinCo, Direct Sale Purchaser, a Direct Sale Transferred Subsidiary or any of their respective Affiliates. In addition, SpinCo shall consider such laid off or terminated Continuing Employee for a pro rata bonus under the terms of the bonus plan of Parent, SpinCo or their respective Affiliates in which the employee participates, including as contemplated by Section 2.3(b). |
| (e) | Credit for Service. SpinCo, Direct Sale Purchaser, and each Direct Sale Transferred Subsidiary shall, or shall cause one of their respective Affiliates to, credit Continuing Employees for service earned prior to the Distribution Effective Time with the Company or any of its Affiliates based on information provided by the Company to SpinCo, in addition to service earned with Parent, SpinCo, Direct Sale Purchaser, a Direct Sale Transferred Subsidiary and any of their respective Affiliates after the Distribution Effective Time, (i) to the extent that service is relevant for purposes of eligibility, vesting or the calculation of vacation, sick days, severance, layoff and similar benefits under any retirement or other employee benefit plan, program or arrangement of Parent, SpinCo, Direct Sale Purchaser, a Direct |
| (f) | Pre-existing Conditions; Coordination. SpinCo, Direct Sale Purchaser and each Direct Sale Transferred Subsidiary shall, and shall cause their respective Affiliates to, waive limitations on benefits relating to any pre-existing conditions of the Continuing Employees and their eligible spouses and dependents. SpinCo, Direct Sale Purchaser and each Direct Sale Transferred Subsidiary shall, and shall cause their respective Affiliates to, recognize for purposes of annual deductible and out-of-pocket limits under their health plans applicable to Continuing Employees, deductible and out-of-pocket expenses paid by Continuing Employees and their respective spouses and dependents under the Company’s or any of its Affiliates’ health plans in the calendar year in which the Distribution Effective Time occurs. |
| (g) | Non-U.S. Continuing Employees. In the case of the Non-U.S. Continuing Employees, SpinCo, Direct Sale Purchaser, each Direct Sale Transferred Subsidiary, and their respective Affiliates shall comply with any additional obligations or standards required by Applicable Laws and any applicable Non-U.S. CBA governing the terms and conditions of their employment or severance of employment in connection with the Distribution, the Direct Sale, the Merger or otherwise. |
| (h) | Collective Bargaining Agreements. The Parties understand and agree that the obligations referenced in subsections (a), (c), (d) and (e) above shall be superseded by the terms of any collective bargaining agreement entered into on or after the Closing Date with respect to any Continuing Employees covered by such collective bargaining agreement. |
| (a) | U.S. CBAs. For the Continuing Employees who are Offer Employees covered by any U.S. CBA, Parent shall, or shall cause Direct Sale Purchaser to, consistent with Applicable Law and to the extent Parent and/or Direct Sale Purchaser is deemed to be a successor employer under the National Labor Relations Act, recognize and, if requested to, bargain in good faith as a successor employer with any labor organization that has been certified or recognized as the exclusive collective bargaining representative of any Continuing Employee who is an Offer Employee; provided, that nothing in this Agreement, the Separation Agreement or the Merger Agreement requires Parent, Direct Sale Purchaser or any of their Affiliates to assume any U.S. CBAs. |
| (b) | Non-U.S. CBAs. Subject to Parent’s compliance with its obligations pursuant to Section 2.4(c), prior to the Distribution Effective Time, the Company shall, or cause an Affiliate of the Company to: |
| (i) | ensure that a Tiger Group Member assumes or maintains each Non-U.S. CBA that (A) covers any Non-U.S. Continuing Employees, (B) otherwise requires assumption by Applicable Law, or (C) expressly states that such agreement applies to successors; |
| (ii) | provide notice of the Distribution and Merger to each labor organization representing any Non-U.S. Continuing Employee that is covered by a Non-U.S. CBA in accordance with the Regulations and/or other Applicable Laws, if applicable; |
| (iii) | ensure that a Tiger Group Member recognizes and bargains in good faith with the applicable representative bodies of any Non-U.S. Continuing Employees, in each case, in connection with the transactions contemplated by this Agreement and the Separation Agreement, to the extent applicable; |
| (iv) | comply with any consultation obligations with labor unions, works councils or other labor organizations representing employees of the Tiger Business employed outside of the United States in accordance with the Regulations and/or other Applicable Laws; and |
| (v) | take no actions in violation of the Regulations or other Applicable Laws pertaining to the protection of employee rights in the event of the transfer of undertakings. |
| (c) | Cooperation by Parent. Parent shall, and shall cause its Affiliates to, cooperate in good faith with the Company and its Affiliates to enable the Company to meet its obligations pursuant to Section 2.4(b), including, without limitation, by promptly providing the Company with any such information as the Company may reasonably request in order to meet its consultation obligations pursuant to Section 2.4(b)(iv). |
| (d) | Collective Bargaining. Prior to the Merger Effective Time, the Company or an Affiliate of the Company will comply with any notice and/or collective bargaining obligations under Applicable Laws or Regulations with respect to the transactions contemplated by the Merger Agreement, the Separation Agreement and this Agreement. Subject to Applicable Law, the Company shall provide advance notice to Parent of any material modifications to any Collective Bargaining Agreement covering any employees of the Tiger Business; provided that, prior to the Merger Effective Time, the Company shall retain the sole authority to agree to or implement any modifications. |
| (e) | Indemnification for Certain Excluded Employment Liabilities. Notwithstanding any other provision of this Agreement, Parent will indemnify the Company for any monetary losses suffered by the Company or any of its Affiliates as a result of pending or future claims asserted by any Offer Employees (or labor organizations representing Offer Employees on behalf of such Offer Employees) under any U.S. CBAs (including, but not limited to, grievances, arbitrations, settlements or other obligations under the U.S. CBAs), excluding any claims asserted by Offer Employees (or labor organizations representing Offer Employees) pertaining to modification, termination or denial of any benefits provided under any Employee Plans that are not expressly allocated to a Tiger Group Member, provided that nothing herein shall be construed to require Parent or any Subsidiary or Affiliate of Parent to assume any contractual obligation under such U.S. CBAs. |
| (a) | each U.S. Continuing Employee shall continue participation under the U.S. Company Plans which provide health, disability, worker’s compensation, life insurance or similar benefits with respect to claims incurred by such U.S. Continuing Employee and his or her eligible spouse, dependents or qualified beneficiaries, as applicable, on or prior to the applicable Employment Commencement Date; |
| (b) | each U.S. Continuing Employee shall continue participation under the U.S. Company Plans which are pension plans with respect to vested, accrued benefits as of the applicable Employment Commencement Date; |
| (c) | each U.S. Continuing Employee shall continue participation under the U.S. Company Plans with respect to outstanding stock options or other equity awards; |
| (d) | each eligible U.S. Continuing Employee may elect to participate in post-retirement coverage under the Company Life, Disability and Medical Plan as in effect from time to time; and |
| (e) | each U.S. Continuing Employee shall continue participation in the U.S. Company Plans to the extent required by Applicable Law or the terms of the U.S. Company Plans. |
| (a) | Terms and Conditions of Employment. In the case of the Non-U.S. Continuing Employees, Parent shall, and shall cause each Tiger Group Member to, in addition to meeting the requirements of this Section 11.2, comply with any additional obligations or standards required by Applicable Laws governing the terms and conditions of their employment or severance of employment in connection with the Separation, the Direct Sale, the Distribution, the Merger or otherwise. |
| (b) | Severance Indemnity. In the event (i) Parent, SpinCo, Direct Sale Purchaser or any of their respective Affiliates does not provide Non-U.S. Continuing Employees a mirror benefit plan that is identical to the provisions that are in effect as of the Merger Effective Time under each Non-U.S. Company Plan covering Non-U.S. Continuing Employees, or (ii) Parent, SpinCo, Direct Sale Purchaser or any of their respective Affiliates amends or otherwise modifies on or after the Merger Effective Time any such mirror benefit plan, any Non-U.S. Transferring Arrangements in which any Non-U.S. Continuing Employee was covered or eligible for coverage immediately prior to the Distribution Effective Time, or other term or condition of employment applicable to such Non-U.S. Continuing Employee immediately prior to the Distribution Effective Time, in each case in a manner that results in any obligation, contingent or otherwise, of the Company or its Affiliates to pay any severance, termination indemnity, or other similar benefit (including such benefits required under Applicable Law) to such person, such severance, termination indemnity, or other similar benefits (and any additional Liability incurred by the Company or any of its Affiliates in connection therewith) shall be treated as SpinCo Liabilities under the Separation Agreement. |
| (a) | Mutual Cooperation by the Company and Parent. From and after the date of this Agreement and after the Merger Effective Time, the Company and Parent shall, and each shall cause their respective Affiliates (including, in the case of Parent, SpinCo and Direct Sale Purchaser) to, cooperate with the other party and its Affiliates to facilitate the obligations of Parent, SpinCo, Direct Sale Purchaser and their respective Affiliates under this Agreement, including but not limited to (i) providing (to the extent permitted by Applicable Law) such current information regarding Continuing Employees or Former Tiger Employees on an ongoing basis as may be necessary to facilitate determinations of eligibility for, and payments of benefits to, such employees (and their spouses and dependents, as applicable) under the Parent Benefit Plans, Transferring Arrangements or Company Plans, as applicable, and (ii) giving such assistance as either party may reasonably require to comply with Applicable Law and regulations governing the transfer of employment from the Company or its Affiliates to SpinCo, Direct Sale Purchaser or their respective Affiliates (including Parent). |
| (b) | Consultation with Employee Representative Bodies. The Parties shall, and shall cause their respective Affiliates to, mutually cooperate in undertaking all legally required provision of information to, or consultations, discussions or negotiations with, employee representative bodies (including any unions or works councils that represent any individuals who are intended to become Continuing Employees covered by a Collective Bargaining Agreement) which represent employees affected by the transactions contemplated by this Agreement, the Separation Agreement and the Merger Agreement. |
| (a) | Parent shall, and shall cause SpinCo, Direct Sale Purchaser and any applicable Affiliate of Parent, SpinCo or Direct Sale Purchaser to, comply with all Applicable Laws regarding the maintenance, use, sharing and processing of Company Personal Data, including, but not limited to (i) compliance with |
| (b) | The Company shall, and shall cause its Affiliates to, comply with all Applicable Laws regarding the maintenance, use, sharing and processing of Company Personal Data, including, but not limited to (i) compliance with any applicable requirements to provide notice to, or obtain consent from, the data subject for processing of Company Personal Data or the identification of such other lawful basis for processing before the Distribution Effective Time (including with respect to transfer of Company Personal Data to Parent or any of its Affiliates), and (ii) taking any other steps necessary to comply with Applicable Laws in relation to data protection, including but not limited to, the execution of any separate agreements with Parent, SpinCo or their respective Affiliates to facilitate the lawful processing of certain Company Personal Data (such agreements to be executed before or after the Merger Effective Time as necessary, notwithstanding anything to the contrary above). |
| (c) | Parent shall, and shall cause SpinCo, Direct Sale Purchaser and all applicable Affiliates of Parent, SpinCo and Direct Sale Purchaser to, share and otherwise process Company Personal Data only as legally permitted. Parent, SpinCo, Direct Sale Purchaser and their respective Affiliates shall use appropriate technical and organizational measures to ensure the security and confidentiality of Company Personal Data in order to prevent, among other things, accidental, unauthorized or unlawful destruction, damage, modification, disclosure, access or loss. Parent agrees that, before the Merger Effective Time, neither it nor its Affiliates shall disclose any Company Personal Data to third parties without the express written approval of the Company, unless required by Applicable Law. Parent, SpinCo, Direct Sale Purchaser and their respective Affiliates shall promptly inform the Company of any breach of this security and confidentiality undertaking, unless prohibited from doing so by Applicable Law. |
|
GENERAL ELECTRIC COMPANY
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
|
TRANSPORTATION SYSTEMS HOLDINGS INC.
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
|
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
|
WABTEC US RAIL, INC.
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
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| 1 | Note to Draft: The parties will revise this form of Tax Matters Agreement appropriately in the event that the Distribution is required to be restructured pursuant to Section [8.07(f)] of the Merger Agreement. |
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SECTION 1.
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Definitions.
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F-1
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SECTION 2.
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Sole Tax Sharing Agreement..
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F-10
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SECTION 3.
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Certain Pre-Closing Matters.
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F-10
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SECTION 4.
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Allocation of Taxes.
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F-11
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SECTION 5.
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Preparation and Filing of Tax Returns.
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F-13
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SECTION 6.
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Apportionment of Earnings and Profits and Tax Attributes.
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F-16
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SECTION 7.
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Utilization of Tax Attributes.
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F-16
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SECTION 8.
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Deductions and Reporting for Certain Awards.
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F-17
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SECTION 9.
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Tax Refunds.
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F-17
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SECTION 10
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Certain Representations and Covenants.
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F-18
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SECTION 11.
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Section 336(e) Elections.
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F-20
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SECTION 12.
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Direct Sale Matters..
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F-21
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SECTION 13..
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Allocation of Shared Tax Refunds
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F-22
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SECTION 14.
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Indemnities.
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F-24
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SECTION 15.
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Payments.
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F-25
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SECTION 16.
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Communication and Cooperation.
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F-26
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SECTION 17.
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Audits and Contest.
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F-27
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SECTION 18.
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Notices.
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F-28
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SECTION 19.
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Costs and Expenses.
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F-29
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SECTION 20.
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Effectiveness; Termination and Survival.
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F-29
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SECTION 21.
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Specific Performance.
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F-29
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SECTION 22.
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Captions.
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F-29
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SECTION 23.
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Entire Agreement; Amendments and Waivers.
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F-30
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SECTION 24.
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Governing Law and Interpretation.
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F-30
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SECTION 25.
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Dispute Resolution.
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F-30
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SECTION 26.
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Counterparts.
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F-31
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SECTION 27.
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Successors and Assigns; Third Party Beneficiaries.
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F-31
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SECTION 28.
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Authorization, Etc.
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F-31
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SECTION 29.
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Change in Tax Law.
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F-31
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| (a) | As used in this Agreement: |
| 2 | Note to Draft: The Company to provide description of one or more active trades or businesses for purposes of Section 355(b) prior to Closing. |
| (a) | any ‘‘person’’ or ‘‘group’’ (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) becomes the beneficial owner of securities of Parent representing more than fifty percent (50%) of the combined voting power of Parent’s then outstanding voting securities; |
| (b) | the shareholders of Parent approve a plan of complete liquidation or dissolution of Parent or there is consummated an agreement or series of related agreements for the sale, lease or other disposition, directly, or indirectly, by Parent of all or substantially all of Parent’s assets, other than such sale, lease or other disposition by Parent of all or substantially all of Parent’s assets to an entity at least fifty percent (50%) of the combined voting power of the voting securities of which are owned by shareholders of Parent in substantially the same proportions as their ownership of Parent immediately prior to such disposition; |
| (c) | there is consummated a merger or consolidation of Parent or any direct or indirect subsidiary of Parent with any other corporation or other entity, and, immediately after the consummation of such merger or consolidation, either (i) the board of directors of Parent immediately prior to the merger or consolidation does not constitute at least a majority of the board of directors of the company resulting from or surviving such merger or consolidation or, if such company is a Subsidiary, the ultimate parent thereof, or (ii) all of the Persons who were the respective beneficial owners of the voting securities of Parent immediately prior to such merger or consolidation do not Beneficially Own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities of the Person resulting from or surviving such merger or consolidation or, if such company is a Subsidiary, the ultimate parent thereof; |
| (d) | a ‘‘change of control’’ or similar defined term in any agreement governing indebtedness of the Parent Group with aggregate principal amount or aggregate commitments outstanding in excess of $[•]. |
| (1) | in each Tax Year ending on or after such date of a Material Breach Payment, the Parent Group will have taxable income sufficient to fully use (x) the deductions arising from the Basis Adjustments and (y) the SpinCo Tax Attributes, in each case, during such Tax Year or future Tax Years (including, for the avoidance of doubt, Basis Adjustments that would result from future payments pursuant to Section 13(c) that would be paid in accordance with the Valuation Assumptions) in which such deductions or SpinCo Tax Attributes, as the case may be, would become available; |
| (2) | the U.S. federal, state and local income tax rates that will be in effect for each such Tax Year will be those specified for each such Tax Year by the Code and other Law as in effect on the date of a Material Breach Payment, except to the extent any change to such tax rates for such Tax Year have already been enacted into law, in which case the changed tax rates shall be used as the tax rates in effect for such Tax Year; |
| (3) | all taxable income of the Parent Group will be subject to the maximum applicable tax rates for U.S. federal, state and local income taxes throughout the relevant period; |
| (4) | any loss or credit carryovers generated by any Basis Adjustment or SpinCo Tax Attribute (including such Basis Adjustment generated as a result of payments under this Agreement) and available as of such date of the Material Breach Payment will be used by the Parent Group ratably in each Tax Year from such date of the Material Breach Payment through the scheduled expiration date of such loss or credit carryovers or, if there is no scheduled expiration date for any such loss or credit carryover, the fifth anniversary of the date of such a Material Breach Payment; |
| (5) | any non-amortizable Reference Assets (other than Subsidiary Stock) will be disposed of in a fully taxable transaction on the later of (i) the fifteenth anniversary of the applicable Basis Adjustment and (ii) such date of the Material Breach Payment, for an amount sufficient to fully utilize the Basis Adjustment with respect to such Reference Asset; |
| (6) | any Subsidiary Stock will be deemed never to be disposed of; and |
| (7) | any payment obligations pursuant to Section 13© will be satisfied on the date that any Tax Return to which such payment obligation relates is required to be filed excluding any extensions. |
| (b) | Each of the following terms is defined in the Section set forth opposite such term: |
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Term
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Section
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336(e) Agreement
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Section 11(b)
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336(e) Allocation Statement
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Section 11(c)
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336(e) Value Allocation
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Section 11(c)
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Additional Rulings
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Section 3(c)
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Applicable Subsidiary
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Section 11(b)
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Certification
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Section 13(b)(iii)
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Company Structure Benefits
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Section 13(a)
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Company Tax Proceeding
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Section 17(b)
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Direct Sale Allocation
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Section 12(a)
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Direct Sale Allocation Statement
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Section 12(b)
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Due Date
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Section 15(a)
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Election Statement
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Section 11(b)
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Internal Tax-Free Transactions
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Schedule B
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IRS Submissions
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Section 3(b)
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Material Breach Payment
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Section 13(c)(vi)
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Past Practices
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Section 5(f)(i)
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Redactable Information
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Section 3(b)
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Section 336(e) Election
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Section 11(b)
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Shareholders Agreement
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Section 10(b)(ix)
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Term
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Section
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SpinCo Subpart F Taxes
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Section 4(c)(i)
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Tax Arbiter
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Section 25
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Tax Referee
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Section 11(c)
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Tax Refund Recipient
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Section 9(c)
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| (c) | All capitalized terms used but not defined herein shall have the same meanings as in the Separation Agreement. Any term used in this Agreement which is not defined in this Agreement or the Separation Agreement shall, to the extent the context requires, have the meaning assigned to it in the Code or the applicable Treasury Regulations thereunder (as interpreted in administrative pronouncements and judicial decisions) or in comparable provisions of Applicable Tax Law. The words ‘‘hereof’’, ‘‘herein’’ and ‘‘hereunder’’ and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Sections and Schedules are to Sections and Schedules of this Agreement unless otherwise specified. All Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words ‘‘include’’, ‘‘includes’’ or ‘‘including’’ are used in this Agreement, they shall be deemed to be followed by the words ‘‘without limitation’’, whether or not they are in fact followed by those words or words of like import. ‘‘Writing’’, ‘‘written’’ and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute, law or regulation shall be deemed to refer to such statute, law or regulation as amended from time to time and to any rules or regulations promulgated thereunder. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. The word ‘‘extent’’ in the phrase ‘‘to the extent’’ shall mean the degree to which a subject or other theory extends and such phrase shall not mean ‘‘if’’. The parties have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. The terms ‘‘or’’, ‘‘any’’ and ‘‘either’’ are not exclusive, except to the extent expressly provided otherwise. |
| (a) | Parent shall cooperate in good faith with any written request by the Company to obtain a private letter ruling, closing agreement, or similar determination with respect to the U.S. federal, state, local, or non-U.S. income tax consequences of the Internal Reorganization, the SpinCo Transfer, the Distribution, or the Merger. |
| (b) | The Company and SpinCo shall use their reasonable best efforts to seek, as promptly as practicable, the Ruling, in form and substance reasonably satisfactory to the Company and Parent unless the Company elects to waive the condition set forth in [clause (y) of Section 9.03(b)]4 of the Merger Agreement and |
| 3 | Note to Draft: Tax-related provisions of other Ancillary Agreements to be cross-referenced. |
| 4 | Note to Draft: To include cross-reference to opinion condition provision of Merger Agreement. Delivery of opinion will require receipt of the Ruling. |
| (c) | In addition to the matters described in the definition of ‘‘Ruling’’ in Section 1(a), in the event that the Company and SpinCo jointly determine to seek to obtain one or more determinations from the IRS in the Ruling (or a supplemental private letter ruling) with respect to the application of Section 355(e) of the Code to the Distribution (‘‘Additional Rulings’’), the provisions of Section 3(b) shall apply to any request for such Additional Rulings mutatis mutandis. The Company shall consider in good faith any written request by Parent that the Company seek to obtain any such Additional Rulings. Notwithstanding anything to the contrary in this Section 3(c), the Company may reject any request by Parent regarding Additional Rulings if the Company, in its reasonable discretion, determines that seeking such Additional Rulings could delay or prevent the receipt of the Ruling or the occurrence of the Closing. |
| (a) | General Allocation Principles. Except as provided in Section 4(b), all Taxes shall be allocated as follows: |
| (i) | Allocation of Taxes for Combined Tax Returns. The Company shall be allocated all Taxes reported, or required to be reported, on any Combined Tax Return that any member of the Company Group files or is required to file under the Code or other Applicable Tax Law; provided, however, that to the extent any such Combined Tax Return includes any Tax Item attributable to any member of the SpinCo Group or the SpinCo Business for any Post-Distribution Period, SpinCo shall be allocated all Taxes attributable to such Tax Items, determined on a ‘‘with and without’’ basis. |
| (A) | The Company shall be allocated all Taxes reported, or required to be reported, on (x) a |
| 5 | Note to Draft: To include cross-reference to restructuring covenant in the Merger Agreement in the event the Ruling cannot be obtained. |
| (B) | SpinCo shall be allocated all Taxes reported, or required to be reported, on a SpinCo Separate Tax Return with respect to a Post-Distribution Period, other than to the extent attributable to, resulting from or arising in connection with a Specified SpinCo Pre-Closing Tax Matter. |
| (iii) | Taxes Not Reported on Tax Returns. |
| (A) | The Company shall be allocated any Tax attributable to any member of the Company Group or the Company Business that is not required to be reported on a Tax Return. |
| (B) | Any Tax attributable to any member of the SpinCo Group or the SpinCo Business that is not required to be reported on a Tax Return shall be allocated to (x) the Company, if with respect to a Pre-Distribution Period, and (y) SpinCo, if with respect to a Post-Distribution Period. |
| (b) | Special Allocation Rules. Notwithstanding any other provision in this Section 4, the Taxes set forth in this Section 4(b) shall be allocated as follows: |
| (i) | Transfer Taxes. Transfer Taxes (other than those attributable to the Internal Reorganization and the SpinCo Transfer) shall be allocated 50% to the Company and 50% to SpinCo. Any Transfer Taxes attributable to the Internal Reorganization or the SpinCo Transfer shall be allocated solely to the Company. |
| (ii) | Taxes Relating to Compensatory Equity Interests. Any Tax liability (including, for the avoidance of doubt, the satisfaction of any withholding Tax obligation) relating to the issuance, exercise, vesting or settlement of any Compensatory Equity Interest shall be allocated in a manner consistent with Section 8. |
| (iii) | Distribution Taxes and Tax-Related Losses. |
| (A) | Any liability for Distribution Taxes and Tax-Related Losses resulting from a SpinCo Disqualifying Action shall be allocated in a manner consistent with Section 14(a)(ii). |
| (B) | Any liability for Distribution Taxes and Tax-Related Losses not described in Section 4(b)(iii)(A) shall be allocated in a manner consistent with Section 14(b)(ii). |
| (iv) | Section 355(e) and Section 336(e) Election. Any liability for any Tax of the Company Group (other than Transfer Taxes, the allocation of which shall be governed by Section 4(b)(i)) resulting from the application of Section 355(e) of the Code and the Section 336(e) Elections shall be allocated to the Company. |
| (v) | Direct Sale Assets and Liabilities. Any liability for (A) Taxes imposed or assessed on or in respect of the Direct Sale Assets or Direct Sale Liabilities for a Pre-Distribution Period and (B) Taxes of any Direct Sale Transferred Subsidiary for a Pre-Distribution Period (in each case, other than Transfer Taxes, the allocation of which shall be governed by Section 4(b)(i)) shall be allocated to the Company. |
| (c) | Allocation Conventions. |
| (i) | All Taxes allocated pursuant to Section 4(a) shall be allocated in accordance with the Closing of the Books Method; provided, however, that if Applicable Tax Law does not permit a SpinCo Group member to close its Taxable year on the Distribution Date, the Tax attributable to the operations of the members of the SpinCo Group for any Pre-Distribution Period shall be the Tax computed using the Closing of the Books Method; provided, further, that any and all Taxes reported, or required to be reported, on a SpinCo Separate Tax Return, or a Tax Return of a member of the Parent Group to the extent attributable to a member of the SpinCo Group, under Section 951(a), Section 951A(a) or Section 965(a) of the Code (‘‘SpinCo Subpart F Taxes’’) that, in each case, are attributable to Tax Items for a Pre-Distribution Period (determined as though the Taxable year of each specified foreign corporation (within the meaning of Section 965(e) of the |
| (ii) | Any Tax Item of SpinCo, Parent, or any member of their respective Groups arising from a transaction engaged in outside the ordinary course of business on the Distribution Date after the Distribution Effective Time shall be properly allocable to SpinCo and any such transaction by or with respect to SpinCo, Parent, or any member of their respective Groups occurring after the Distribution Effective Time (including the Merger) shall be treated for all Tax purposes (to the extent permitted by Applicable Tax Law) as occurring at the beginning of the day following the Distribution Date in accordance with the principles of Treasury Regulations Section 1.1502-76(b); provided that the foregoing shall not include any action that is undertaken pursuant to the Internal Reorganization, the SpinCo Transfer or the Distribution. |
| (a) | Company Group Combined Tax Returns. |
| (i) | The Company shall prepare and file, or cause to be prepared and filed, Combined Tax Returns which a member of the Company Group is required or, subject to Section 5(f)(iv), permitted, to file. Each member of any such Combined Group shall execute and file such consents, elections and other documents as may be required, appropriate or otherwise requested by the Company in connection with the filing of such Combined Tax Returns (provided that, in the case of any such document the filing of which is not required, the execution and filing of such document could not reasonably be expected to adversely affect such member or the Parent Group (or any member thereof) for a Post-Distribution Period). |
| (ii) | The parties and their respective Affiliates shall elect to close the Taxable year of each SpinCo Group member on the Distribution Date, to the extent permitted by Applicable Tax Law. |
| (b) | SpinCo Separate Tax Returns. |
| (i) | Tax Returns to be Prepared by the Company. The Company shall prepare (or cause to be prepared) and, to the extent permitted by Applicable Law, file (or cause to be filed) all SpinCo Separate Tax Returns for any Taxable period that ends on or before the Distribution Date; provided, however, that with respect to any such Tax Return that is prepared by the Company but required to be filed by a member of the Parent Group under Applicable Law, the Company shall provide such Tax Returns to Parent not less than 3 Business Days prior to the due date for filing such Tax Returns (taking into account any applicable extension periods) with the amount of any Taxes shown as due thereon, and Parent shall execute and file (or cause to be executed and filed) the Tax Returns. |
| (ii) | Tax Returns to be Prepared by Parent. Parent shall prepare and file (or cause to be prepared and |
| (c) | Provision of Information; Timing. SpinCo and Parent shall maintain all necessary information for the Company (or any of its Affiliates) to file any Tax Return that the Company is required or permitted to file under this Section 5, and shall provide the Company with all such necessary information in accordance with the Company Group’s past practice. The Company shall maintain all necessary information for Parent (or any of its Affiliates) to file any Tax Return that Parent is required or permitted to file under this Section 5, and shall provide Parent with all such necessary information in accordance with the SpinCo Group’s past practice. |
| (d) | Review of SpinCo Separate Tax Returns. Parent shall submit to the Company a draft of each SpinCo Separate Tax Return (other than a SpinCo Separate Tax Return that (i) relates solely to a Post-Distribution Period or (ii) is a Tax Return filed on an affiliated, consolidated, combined, unitary, fiscal unity or other group basis with Parent or any of its Affiliates (other than any such group that includes solely one or more members of the SpinCo Group, one or more Direct Sale Transferred Subsidiaries, or a combination thereof)) described in Section 5(b)(ii) at least thirty (30) days prior to the due date for the filing of such Tax Return, taking into account any applicable extensions (or, in the case of non-income tax returns, such shorter period as circumstances may reasonably require). The Company shall have the right to review such Tax Return, and Parent (i) shall make any reasonable changes to such Tax Return submitted by the Company, if such changes relate to items in respect of which Parent may have claim for indemnity under Section 14 and (ii) shall consider in good faith any other changes to such Tax Return submitted by the Company, in each case, provided that such changes are submitted no later than fifteen (15) days prior to the due date for the filing of such Tax Return (or, in the case of non-income tax returns, such shorter period as circumstances may reasonably require). The parties agree to consult and to attempt to resolve in good faith any issues arising as a result of the review of any such Tax Return. |
| (e) | Review of Combined Tax Returns with SpinCo Separate Tax Liability. The Company shall submit to Parent a draft of the portions of any Combined Tax Returns (including pro forma portions thereof) that relate solely to one or more members of the SpinCo Group, one or more Direct Sale Transferred Subsidiaries, or a combination thereof, and that reflect a Tax liability allocated to SpinCo pursuant to Section 4(a)(i) at least thirty (30) days prior to the due date for the filing of such Tax Return, taking into account any applicable extensions (or, in the case of non-income tax returns, such shorter period as circumstances may reasonably require). Parent shall have the right to review such portions, and the Company (i) shall make any reasonable changes to such Tax Return submitted by Parent, if such changes relate to items in respect of which the Company may have claim for indemnity under Section 14 and (ii) shall consider in good faith any other changes to such Tax Return submitted by Parent, in each case, provided that such changes are submitted no later than fifteen (15) days prior to the due date for the filing of such Tax Return (or, in the case of non-income tax returns, such shorter period as circumstances may reasonably require). Notwithstanding anything to the contrary in this Agreement, in no event shall Parent or any of its Affiliates be entitled to receive or review all or any portion of any affiliated, combined, consolidated or unitary Tax Return that includes any member of the Company Group (other than a member of the SpinCo Group and any Direct Sale Transferred Subsidiary), except as expressly set forth in this Section 5(e). |
| (f) | Special Rules Relating to the Preparation of Tax Returns. |
| (i) | General Rule. Except as provided in this Section 5(f)(i), the Company shall prepare (or caused to be prepared) any Tax Return for which it is responsible under this Section 5 in accordance with past practices, permissible accounting methods, elections or conventions (‘‘Past Practices’’) used by the members of the Company Group and the members of the SpinCo Group prior to the Distribution Date with respect to such Tax Return (except as otherwise required by Applicable Law), and to the extent any items, methods or positions are not covered by Past Practices, in accordance with reasonable Tax accounting practices selected by the Company. With respect to any Tax Return that Parent has the obligation and right to prepare, or cause to be prepared, under this |
| (ii) | Consistency with Intended Tax Treatment. |
| (A) | The parties shall report the Internal Reorganization in the manner determined by the Company; provided that the Company communicates its treatment of the Internal Reorganization to Parent no fewer than thirty (30) days prior to the due date (taking into account any applicable extensions) for filing an applicable Tax Return that reflects the Internal Reorganization and such treatment is supportable on an at least ‘‘more likely than not’’ level of comfort, unless, and then only to the extent, an alternative position is required pursuant to a Final Determination. |
| (B) | The parties shall report the SpinCo Transfer, the Distribution, the Merger and the Direct Sale for all Tax purposes in a manner consistent with the Intended Tax Treatment and the making of the Section 336(e) Elections unless, and then only to the extent, an alternative position is required pursuant to a Final Determination. |
| (iii) | SpinCo Separate Tax Returns. With respect to any SpinCo Separate Tax Return for which Parent is responsible pursuant to this Agreement, Parent and the other members of the Parent Group shall include all Tax Items in such SpinCo Separate Tax Return in a manner that is consistent with the inclusion of such Tax Items in any related Tax Return for which the Company is responsible to the extent such Tax Items are allocated in accordance with this Agreement. |
| (iv) | Election to File Combined Tax Returns. The Company shall have the sole discretion of filing any Combined Tax Return if the filing of such Tax Return is elective under Applicable Tax Law, except where such an election would be binding on Parent for a Taxable period beginning on or after the Distribution. |
| (v) | Preparation of Transfer Tax Returns. The Member Company required under Applicable Tax Law to file any Tax Returns in respect of Transfer Taxes shall prepare and file (or cause to be prepared and filed) such Tax Returns. If required by Applicable Tax Law, the Company, SpinCo and Parent shall, and shall cause their respective Affiliates to, cooperate in preparing and filing, and join in the execution of, any such Tax Returns. |
| (g) | Payment of Taxes. The Company shall pay (or cause to be paid) to the proper Taxing Authority (or to Parent with respect to any SpinCo Separate Tax Return prepared by the Company but required to be filed by a member of the Parent Group under Applicable Tax Law) the Tax shown as due on any Tax Return for which a member of the Company Group is responsible under this Section 5, and Parent shall pay (or cause to be paid) to the proper Taxing Authority the Tax shown as due on any Tax Return for which a member of the Parent Group is responsible under this Section 5. If any member of the Company Group is required to make a payment to a Taxing Authority for Taxes allocated to SpinCo under Section 4, Parent shall pay the amount of such Taxes to the Company in accordance with Section 14 and Section 15. If any member of the Parent Group is required to make a payment to a Taxing Authority for Taxes allocated to the Company under Section 4, the Company shall pay the amount of such Taxes to Parent in accordance with Section 14 and Section 15. |
| (h) | Notwithstanding anything to the contrary in this Agreement, in no event shall any member of the Company Group or the Parent Group, as the case may be, be entitled to receive, review or otherwise have access to all or any portion of any Tax Return filed on an affiliated, consolidated, combined, |
| (a) | Tax Attributes arising in a Pre-Distribution Period will be allocated to (and the benefits and burdens of such Tax Attribute will inure to) the members of the Company Group and the members of the SpinCo Group in accordance with the Company’s historical practice (except as otherwise required by Applicable Law), the Code, Treasury Regulations, and any applicable state, local and non-U.S. law, as determined by the Company in its reasonable discretion. |
| (b) | After the close of the Taxable period in which the Distribution Date occurs, the Company shall in good faith advise Parent in writing of the portion, if any, of earnings and profits, Tax Attributes, overall domestic loss or other consolidated, combined or unitary attribute which the Company determines shall be allocated or apportioned to the members of the SpinCo Group under Applicable Tax Law (determined, in the case of earnings and profits, in accordance with Treasury Regulations Section 1.336-2(b)(2)(iv)). All members of the Parent Group shall prepare all Tax Returns in accordance with such written notice, except as otherwise required by Applicable Law. In the event of an adjustment to the earnings and profits, any Tax Attributes, overall domestic loss or other consolidated, combined or unitary attribute determined by the Company, the Company shall promptly notify Parent in writing of such adjustment. For the avoidance of doubt, the Company shall not be liable to any member of the Parent Group for any failure of any determination under this Section 6(b) to be accurate under Applicable Tax Law, provided such determination was made in good faith. |
| (c) | Except as otherwise provided herein, to the extent that the amount of any Tax Attribute is later reduced or increased by a Taxing Authority or as a result of a Tax Proceeding, such reduction or increase shall be allocated to the Member Company to which such Tax Attribute was allocated pursuant to this Section 6, as determined by the Company in its reasonable discretion. |
| (a) | Amended Returns. Any amended Tax Return or claim for a refund with respect to any member of the SpinCo Group may be made only by the party responsible for preparing the original Tax Return with respect to such member of the SpinCo Group pursuant to Section 5. Except as required by Applicable Law, such party shall not file or cause to be filed any such amended Tax Return or claim for a refund without the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed, if such filing, assuming it is accepted, could reasonably be expected to change the Tax liability of such other party (or any Affiliate of such other party) for any Taxable period. |
| (b) | Carryback of Tax Attributes. |
| (i) | To the extent permitted by Applicable Tax Law, Parent shall cause the SpinCo Group to elect to forego carrybacks of any Tax Attributes of the SpinCo Group to a Pre-Distribution Period. |
| (ii) | If Parent is unable to forego carrybacks of any Tax Attributes of the SpinCo Group to a Pre-Distribution Period, the Company Group shall, at the request of Parent and at Parent’s sole expense, file any amended Tax Returns reflecting such carryback (unless such filing, assuming it is accepted, could reasonably be expected to increase the Tax liability of the Company or any of its Affiliates for any Taxable period). If the Company Group (or any member thereof) receives a refund as a result of such a carryback (or otherwise realizes a reduction in cash Taxes actually payable, determined on a ‘‘with and without’’ basis), the Company shall remit the amount of such refund (or an amount equal to any such other reduction in cash Taxes) to Parent in accordance with Section 9(b). |
| (c) | Carryforwards to Separate Tax Returns. If (i) any net operating loss, net capital loss, or any tax credit is allocated to a member of a Combined Group pursuant to Section 6 and is carried forward to a SpinCo Separate Tax Return and (ii) the Parent Group (or any member thereof) receives a refund as a result of such a carryforward (or otherwise realizes a reduction in cash Taxes actually payable, |
| (a) | Deductions. Solely the member of the Group for which the relevant individual is currently employed or, if such individual is not currently employed by a member of the Group, was most recently employed at the time of the issuance, vesting, exercise, disqualifying disposition, payment, settlement or other relevant Taxable event, as appropriate, in respect of the Compensatory Equity Interests shall be entitled to claim, in a Post-Distribution Period, any income Tax deduction on its Tax Return in respect of such equity awards and other incentive compensation on its respective Tax Return associated with such event. |
| (b) | If, notwithstanding clause (a), the SpinCo Group or the Parent Group actually utilizes any deductions for a Taxable period ending after the Distribution Date with respect to (i) the issuance, exercise, vesting or settlement after the Distribution Date of any Compensatory Equity Interests, or (ii) any liability with respect to compensation which is required to be paid or satisfied by, or is otherwise allocated to, any member of the Company Group in accordance with any Transaction Agreement, Parent shall remit an amount to the Company equal to the overall net reduction in actual cash Taxes paid (determined on a ‘‘with and without’’ basis) by the SpinCo Group or the Parent Group, as applicable, resulting from the event giving rise to such deduction (and any income in respect of such event, subject to Section 15(b)) in the year of such event. If a Taxing Authority subsequently reduces or disallows the use by the SpinCo Group or the Parent Group, as applicable, of such a deduction, the Company shall return an amount equal to the overall net increase in Tax liability of the SpinCo Group or the Parent Group, as applicable, owing to the Taxing Authority to the remitting party. |
| (c) | Withholding and Reporting. For any Taxable period (or portion thereof), except as the Company may at any time otherwise determine in its reasonable discretion, the Company shall satisfy, or shall cause to be satisfied, all applicable withholding and reporting responsibilities (including all income, payroll, or other Tax reporting related to income to any current or former employees) with respect to the issuance, exercise, vesting or settlement of such Compensatory Equity Interests that settle with or with respect to stock of the Company. The Company, SpinCo and Parent acknowledge and agree that the parties shall cooperate with each other and with third-party providers to effectuate withholding and remittance of Taxes, as well as required Tax reporting, in a timely manner. |
| (a) | Company Tax Refunds. The Company shall be entitled to any Tax Refunds (including, in the case of any refund actually received, any interest thereon actually received from a Taxing Authority) received by any member of the Company Group or any member of the Parent Group with respect to any Tax allocated to a member of the Company Group under this Agreement. |
| (b) | SpinCo and Parent Tax Refunds. SpinCo or Parent, as the case may be, shall be entitled to any Tax Refunds (including, in the case of any refund actually received, any interest thereon actually received from a Taxing Authority) received by any member of the Company Group or any member of the Parent Group after the Distribution Date with respect to any Tax allocated to a member of the SpinCo Group under this Agreement. |
| (c) | A Member Company receiving (or realizing) a Tax Refund to which another Member Company is entitled hereunder (a ‘‘Tax Refund Recipient’’) shall pay over the amount of such Tax Refund (including interest received from the relevant Taxing Authority, but net of any Taxes imposed with respect to such Tax Refund and any other reasonable costs) within thirty (30) days of receipt thereof (or from the due date for payment of any Tax reduced thereby); provided, however, that the other |
| (a) | Representations. |
| (i) | Each of SpinCo and Parent and each other member of their respective Groups represents and warrants that as of the date hereof, it has no plan or intention: |
| (A) | to liquidate SpinCo or to merge or consolidate any member of the SpinCo Group with any other Person subsequent to the Distribution, in each case, except as provided for under the Merger Agreement; |
| (B) | to sell or otherwise dispose of any material asset of any member of the SpinCo Group to a Person other than a member of the SpinCo SAG subsequent to the Distribution, except (w) dispositions in the ordinary course of business, (x) any cash paid to acquire assets in arm’s length transactions, (y) transactions that are disregarded for U.S. federal Tax purposes, and (z) mandatory or optional repayment or prepayment of indebtedness; |
| (C) | to take or fail to take any action in a manner that is inconsistent with the written information and representations furnished by SpinCo or Parent to Company Tax Counsel, Parent Tax Counsel, an Alternative Tax Counsel, or an Alternative Separation Opinion Tax Counsel in connection with the Tax Representation Letters; |
| (D) | to repurchase stock of Parent other than in a manner that satisfies the requirements of Section 4.05(1)(b) of IRS Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by IRS Revenue Procedure 2003-48) and consistent with any representations made to Company Tax Counsel, Parent Tax Counsel, an Alternative Tax Counsel, or an Alternative Separation Opinion Tax Counsel in connection with the Tax Representation Letters; or |
| (E) | to take or fail to take any action in a manner that management of SpinCo or Parent knows or should know is reasonably likely to contravene any agreement with a Taxing Authority to which any member of the SpinCo Group is a party that is entered into prior to the Distribution Date. |
| (ii) | The Company and each other member of the Company Group represents and warrants that as of the date hereof, it has no plan or intention to take or fail to take any action in a manner that is inconsistent with the written information and representations furnished by the Company to Company Tax Counsel, Parent Tax Counsel, an Alternative Tax Counsel, or an Alternative Separation Opinion Tax Counsel in connection with the Tax Representation Letters. |
| (b) | Covenants. |
| (i) | Neither SpinCo nor Parent shall, nor shall SpinCo or Parent permit any member of their respective Groups to, take or fail to take, as applicable, any action that constitutes a SpinCo Disqualifying Action; |
| (ii) | The Company shall not, and shall not permit any member of the Company Group to, take or fail to take, as applicable, any action that constitutes a Company Disqualifying Action. |
| (iii) | Each of the Company, SpinCo and Parent will not, and will not permit any other member of their respective Groups to, take or fail to take any action in a manner that is inconsistent with the information and representations furnished by the Company, SpinCo or Parent to Company Tax Counsel, Parent Tax Counsel, an Alternative Tax Counsel, or an Alternative Separation Opinion Tax Counsel in connection with the Tax Representation Letters; |
| (iv) | Each of SpinCo, Parent and each other member of their respective Groups covenants to the Company that, without the prior written consent of the Company, during the two-year period following the Distribution Date, except as described in the Transaction Agreements or the Financing Agreements: |
| (A) | SpinCo will (1) maintain its status as a company engaged in the Active Trade or Business for purposes of Section 355(b)(2) of the Code, (2). not engage in any transaction that would result in it ceasing to be a company engaged in the Active Trade or Business for purposes of Section 355(b)(2) of the Code, (3) cause each other member of the SpinCo Group whose Active Trade or Business is relied upon for purposes of qualifying the Distribution for the Tax-Free Status to maintain its status as a company engaged in such Active Trade or Business for purposes of Section 355(b)(2) of the Code and any such other Applicable Tax Law, (4) not engage in any transaction or permit any other member of the SpinCo Group to engage in any transaction that would result in a member of the SpinCo Group described in clause (3) hereof ceasing to be a company engaged in the relevant Active Trade or Business for purposes of Section 355(b)(2) of the Code or such other Applicable Tax Law, taking into account Section 355(b)(3) of the Code for purposes of each of clauses (1) through (4) hereof, and (5) not dispose of or permit any other member of the SpinCo Group to dispose of, directly or indirectly, any interest in a member of the SpinCo Group described in clause (3) hereof or permit any such member of the SpinCo Group to make or revoke any election under Treasury Regulations Section 301.7701-3; |
| (B) | neither SpinCo nor Parent will repurchase stock of Parent in a manner contrary to the requirements of Section 4.05(1)(b) of IRS Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by IRS Revenue Procedure 2003-48) or inconsistent with any representations made by SpinCo to Company Tax Counsel, Parent Tax Counsel, an Alternative Tax Counsel, or an Alternative Separation Opinion Tax Counsel in connection with the Tax Representation Letters; and |
| (C) | neither Parent nor SpinCo will, or will agree to, merge, consolidate or amalgamate with any other Person (except as provided for under the Merger Agreement), unless, in the case of a merger or consolidation, Parent or SpinCo is the survivor of the merger, consolidation or amalgamation; |
| (v) | On or after the Distribution Date, neither SpinCo nor Parent will, nor will either permit any other member of its Groups to, make or change any accounting method, amend any Tax Return or take any Tax position on any Tax Return, take any other action or enter into any transaction that could reasonably be expected to result in any increased Tax liability or reduction of any Tax asset of any member of the Company Group in respect of any Pre-Distribution Period; provided that this Section 10(b)(v) shall not apply to the incurrence of any Tax liability (or the reduction in any Tax asset) of the Company Group as a result of the SpinCo Transfer, the Distribution, the Internal Reorganization, or the Merger; |
| (vi) | Each of SpinCo and Parent will not take or fail to take, or permit any other member of the SpinCo Group or the Parent Group to take or fail to take, any action which (A) would be inconsistent with any covenant, representation or agreement made by SpinCo, Parent or any of their respective Affiliates in the Tax Representation Letters, the Separation Agreement, the Merger Agreement or any other Transaction Document, or (B) prevents or could reasonably be expected to result in tax treatment that is inconsistent with the Tax-Free Status; |
| (vii) | The Company will not take or fail to take, or permit any other member of the Company Group to take or fail to take, any action which (A) would be inconsistent with any covenant, representation or agreement made by the Company or any of its Affiliates in the Tax Representation Letters, the Separation Agreement, the Merger Agreement or any other Transaction Document, or (B) prevents or could reasonably be expected to result in tax treatment that is inconsistent with the Tax-Free Status; and |
| (viii) | If Parent becomes aware of an event described in clause (c) of the definition of Credit Event, Parent shall provide prompt written notice to the Company. |
| (ix) | Notwithstanding anything to the contrary in the Shareholders Agreement dated as of [•] between Parent, the Company and the other parties thereto (the ‘‘Shareholders Agreement’’): (A) before the second anniversary of the Distribution Date, the Company shall, and shall be permitted to, transfer, without limitation, a number of the Company’s Parent Shares in ‘‘public offerings’’ within the meaning of Treasury Regulations Section 1.355-7 equal to the lesser of (1) all of the Company’s Parent Shares and (2) a number of the Company’s Parent Shares that results in the application of Section 355(e) to the Distribution; (B) no restriction on transfer in the Shareholders Agreement other than Section 3.1 and Section 3.2 thereof shall be applicable to any such ‘‘public offering’’ of the Company’s Parent Shares prior to the time the Company has transferred in ‘‘public offerings’’ a number of the Company’s Parent Shares as set forth in clause (A); (C) Parent shall use its reasonable best efforts to facilitate any such transfer; and (D) reasonably in advance of each such ‘‘public offering,’’ the Company shall provide to Parent any information relied upon by the Company in determining its compliance with the obligations of the Company set forth in the clause (A). |
| (c) | SpinCo Covenants Exceptions. Notwithstanding the provisions of Section 10(b), SpinCo, Parent and the other members of their respective Groups may: |
| (i) | pay cash to acquire assets in arm’s length transactions, engage in transactions that are disregarded for U.S. federal Tax purposes, and make mandatory or optional repayments or prepayments of indebtedness; |
| (ii) | dispose of assets if the aggregate fair value of all such assets does not exceed $[•] million; or |
| (iii) | in the case of any other action that would reasonably be expected to be inconsistent with the covenants contained in Section 10(b), if either: (A) SpinCo or Parent notifies the Company of its proposal to take such action and Parent and the Company obtain a ruling from the IRS to the effect that such actions will not affect the Tax-Free Status, provided that Parent agrees in writing to bear any expenses associated with obtaining such a ruling and, provided, further, that the Parent Group shall not be relieved of any liability under Section 14(a) by reason of seeking or having obtained such a ruling; or (B) SpinCo or Parent notifies the Company of its proposal to take such action and obtains an unqualified opinion of counsel in form and substance reasonably satisfactory to the Company (x) from a Tax advisor recognized as an expert in U.S. federal income Tax matters and reasonably acceptable to the Company, (y) on which the Company may rely and (z) to the effect that such action will not affect the Tax-Free Status (assuming that the Internal Reorganization, the Distribution and the Merger otherwise qualify for the Tax-Free Status), provided, further, that the Parent Group shall not be relieved of any liability under Section 14(a) by reason of having obtained such an opinion. the Company shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to cooperate in good faith with any reasonable written request by Parent to obtain any ruling from the IRS or any opinion of counsel described in the preceding sentence, including by providing such information, representations and covenants as the IRS or tax counsel shall reasonably require in connection with the ruling or opinion; provided that neither the Company nor any of its Subsidiaries shall be required to (x) make any representation that such Person does not believe to be accurate, (y) agree to any covenant with which it is not reasonably practicable to comply or (z) deliver any information that the Company, in its good faith judgment, considers to be confidential information that is not (and is not reasonably expected to become) a part of any other publicly available information. |
| (a) | The Company, Parent and SpinCo agree that the Distribution is intended to be treated as (1) a distribution to which Section 355(e) of the Code applies and (2) a QSD. |
| (b) | The Company and SpinCo agree (and shall cause the members of their respective Groups) to make a timely election under Section 336(e) of the Code and the Treasury Regulations issued thereunder and under any comparable statutes in any other jurisdiction for each member of the SpinCo Group that is a domestic corporation for U.S. federal income Tax purposes with respect to the Distribution (each such subsidiary, an ‘‘Applicable Subsidiary,’’ and each such election, a ‘‘Section 336(e) Election’’) and to file each such election in accordance with Applicable Law. Without limiting the foregoing: (1) as soon |
| (c) | Within 90 days after the Closing Date, the Company shall deliver to Parent a statement (the ‘‘336(e) Allocation Statement’’) allocating the ‘‘aggregate deemed asset disposition price’’ and ‘‘adjusted grossed-up basis’’ (as such terms are defined in Treasury Regulations Sections 1.336-3 and 1.336-4) of the assets of SpinCo and each Applicable Subsidiary in accordance with the Treasury regulations promulgated under Section 336(e). Parent shall have the right to review the 336(e) Allocation Statement. If within 45 days after receipt of the 336(e) Allocation Statement Parent notifies the Company in writing that it disagrees with one or more items on the 336(e) Allocation Statement, the Company and Parent shall negotiate in good faith to resolve such dispute. If the Company and Parent fail to resolve such dispute within 30 days, an accounting firm of national standing mutually acceptable to the Company and Parent (the ‘‘Tax Referee’’) shall determine the appropriate allocation and revise the 336(e) Allocation Statement accordingly. If Parent does not respond within 45 days of its initial receipt of the 336(e) Allocation Statement, or upon resolution of the disputed items, the allocation reflected on the 336(e) Allocation Statement (as such may have been adjusted) shall be the ‘‘336(e) Value Allocation’’ and shall be binding on the parties hereto. The Company, Parent and SpinCo agree to act in accordance with the 336(e) Value Allocation in the preparation, filing and audit of any Tax Return. If an adjustment is made pursuant to Section [2.10]6 of the Separation Agreement, the 336(e) Value Allocation shall be adjusted in accordance with Section 336(e) of the Code and the Treasury Regulations promulgated thereunder, as mutually agreed by the Company and Parent. In the event that agreement is not reached within 20 days after the determination of the [SpinCo Increase Amount] or [SpinCo Deficit Amount] (as the case may be and, in each case, as defined in the Separation Agreement), any disputed items shall be resolved by the Tax Referee. |
| (d) | [To the extent permitted by Applicable Law, the parties shall treat the assets set forth on Schedule C as ‘‘qualified property’’ within the meaning of Section 168(k)(2) of the Code.7] |
| (a) | The Company, Parent and SpinCo agree that the Direct Sale is intended to be treated as a taxable purchase and sale of the Direct Sale Assets. |
| (b) | Within 90 days after the closing of the Direct Sale, the Company shall deliver to Parent a statement |
| 6 | Note to Draft: To cross-reference SpinCo Cash/Indebtedness Adjustment provisions. |
| 7 | Note to Draft: Parties to determine if, at Closing, the SpinCo Group will hold any such property. |
| (c) | To the extent permitted by Applicable Law, the parties shall treat the assets set forth on Schedule D as ‘‘qualified property’’ within the meaning of Section 168(k)(2) of the Code. |
| (d) | If the Company (or any of its Affiliates) and Direct Sale Purchaser (or any of its Affiliates) are eligible to make an election under Section 338(h)(10) of the Code in respect of the actual or deemed purchase and sale of the equity interests of a Direct Sale Transferred Subsidiary in the Direct Sale, the Company and Direct Sale Purchaser shall (or, if applicable, shall cause their respective Affiliates to), in Parent’s discretion, jointly make a timely election under Section 338(h)(10) of the Code and the Treasury Regulations issued thereunder (and under any comparable statutes in any other jurisdiction) in respect of such purchase and sale and shall file each such election in accordance with Applicable Law. The provisions of Section 11(c) shall apply to any such election mutatis mutandis. |
| (a) | Structure Benefits shall be allocated as provided below. |
| (i) | The Company Group shall be entitled to 100% of Structure Benefits until the Company Group has been allocated Structure Benefits equal to the Base Company Structure Amount (‘‘Company Structure Benefits’’). |
| (ii) | The Parent Group shall be entitled to retain any Structure Benefits that are not Company Structure Benefits. |
| (b) | Determination of Structure Benefits. |
| (i) | No later than one hundred twenty (120) days after the Closing Date, the Company shall deliver to Parent a certification, signed by the chief financial officer of the Company, setting forth information regarding the Non-Stepped-Up Basis of the Reference Assets at a level of detail reasonably necessary to permit the determination of Structure Benefits for each Tax Year. |
| (ii) | No later than thirty (30) days after the due date (taking into account extensions validly obtained) for filing the Parent Group Return for each Tax Year, Parent shall provide the Company with a certification signed by the chief financial officer of Parent setting forth the amount, if any, with respect to such Tax Year of the Structure Benefits realized by the Parent Group and the amount of such Structure Benefits that are Company Structure Benefits. |
| (iii) | The certifications pursuant to clauses (b)(i) and (b)(ii) of this Section (each, a ‘‘Certification’’) shall (A) set forth in reasonable detail the basis for the applicable calculation or determination, (B) be delivered together with any Supporting Information and (C) in the case of a Certification |
| 8 | Note to Draft: To cross-reference Direct Sale adjustment provisions. |
| (iv) | Notwithstanding anything to the contrary contained in this Section 13(b), (i) the Company and Parent shall use commercially reasonable efforts to resolve any disputes with respect to the Certifications, and (ii) if the Company and Parent are unable to resolve such dispute within ten (10) days, the applicable Certification and a certification prepared by the chief financial officer of the non-preparing party that resolves the disputed item or items in the manner that such chief financial officer believes is appropriate and sets forth in reasonable detail the basis for the determination shall be submitted to the Tax Arbiter for resolution in accordance with Section 25. |
| (c) | Payment of Structure Benefits. |
| (i) | In General. With respect to each Tax Year, within ten (10) days of the agreement by the Company and Parent that the applicable Certification is acceptable to each party, Parent shall make a payment to the Company equal to the Company Structure Benefits with respect to such Tax Year, if any. |
| (ii) | Tax Treatment. Unless otherwise required pursuant to a Final Determination, the parties agree to treat, for U.S. federal and applicable state and local income tax purposes: |
| (A) | [Any payment (or portion thereof) pursuant to this Section 13(c) that is not attributable to the Direct Sale as a contribution by Parent to SpinCo and subsequent payment by SpinCo, giving rise to an upward adjustment to the ‘‘aggregate deemed asset disposition price’’ and ‘‘adjusted grossed-up basis’’ (as such terms are defined in Treasury Regulations Section 1.336-3 and 1.336-4) of the assets of SpinCo and each Applicable Subsidiary]9; and |
| (B) | Any payment (or portion thereof) pursuant to this Section 13(c) that is attributable to the Direct Sale (other than amounts accounted for as interest under the Code) as an adjustment to the Direct Sale Consideration. |
| (iii) | Payments Following a Parent Change of Control. In the event of a Parent Change of Control, all payments with respect to Structure Benefits following such Parent Change of Control shall be mutually determined by the Company and Parent acting in good faith based on the Parent Group’s projected standalone taxable income, which shall be calculated at the time of such Parent Change of Control based on the Parent Group’s standalone activities, balance sheet, Tax Attributes and other characteristics, in each case, immediately before such Parent Change of Control. |
| (iv) | Late Payments. Any payment required to be made by Parent under this Agreement with respect to Structure Benefits that is not made when due under the terms of this Agreement shall be payable together with any interest thereon, computed at the Default Rate and commencing from the date on which such payment was due and payable. |
| (v) | Acceleration on Material Breach. In the event that (i) (x) Parent fails to make any payment (other than a payment of a de minimis amount) under this Agreement with respect to Structure Benefits within thirty (30) days after the date when due, (y) following the expiration of such thirty (30) day period, the Company provides written notice to Parent of such failure and (z) Parent fails to cure such failure within ten (10) days of receipt of such written notice, or (ii) a Credit Event has occurred, then all obligations hereunder with respect to such Structure Benefits shall be accelerated and become immediately due and payable, and shall include, without duplication: (1) the Material |
| 9 | Note to Draft: Treatment to agreed prior to Closing jointly by the Company and Parent, provided that such agreed treatment shall be consistent with delivery of all tax opinions that are conditions to the closing of the Merger. |
| (vi) | Payment Upon Material Breach. The ‘‘Material Breach Payment’’ payable to the Company pursuant to Section 13(c)(v) shall equal the present value, discounted at the Default Rate, of all payments with respect to Structure Benefits that would be required to be paid to the Company using the Valuation Assumptions. |
| (vii) | Repayment Upon Certain Occurrences. In the event that (i) any Structure Benefit is disallowed pursuant to a Final Determination and (ii) after giving effect to such Final Determination, (x) the aggregate amount of payments previously made to the Company in respect of Structure Benefits (and not repaid pursuant to this Section 13(c)(vii)) exceeds (y) the aggregate amount of Structure Benefits previously recognized (and not disallowed), the Company shall pay to Parent an amount equal to such excess; provided that, for purposes of Section 13(a)(i), the portion of such disallowed Structure Benefit in respect of which a payment is made by the Company pursuant to this Section 13(c)(vii) shall thereafter be deemed never to have been allocated to the Company. |
| (viii) | Withholding. Parent, the Company and their respective Affiliates shall be entitled to deduct and withhold from any amount payable pursuant to this Agreement such amounts as are required to be deducted and withheld under the Code or any provision of state, local or non-U.S. Law. To the extent that amounts are so withheld and paid over to the appropriate taxing authority, such withheld amounts shall be treated for all purposes of this Agreement, other than Section 13(c)(i), as having been paid to the Person in respect of whom such withholding was made. |
| (a) | Parent Indemnity to the Company. Parent and each other member of the Parent Group shall jointly and severally indemnify the Company and the other members of the Company Group against, and hold them harmless, without duplication, from: |
| (i) | any Tax liability allocated to SpinCo pursuant to Section 4; |
| (ii) | any Distribution Taxes or Tax-Related Losses attributable to a SpinCo Disqualifying Action (including, for the avoidance of doubt, any Taxes and Tax-Related Losses resulting from any action for which the conditions set forth in Section 10(c)(iii) are satisfied); provided that, in the event that any Distribution Taxes or Tax-Related Losses are attributable to both a SpinCo Disqualifying Action, on the one hand, and a Company Disqualifying Action, on the other hand, Parent shall be required to indemnify the Company pursuant to this Section 12(a)(ii) only to the extent that such SpinCo Disqualifying Action contributed to the incurrence of such Distribution Taxes or Tax-Related Losses (relative to the extent that such Company Disqualifying Action contributed to the incurrence of such Distribution Taxes or Tax-Related Losses); and |
| (iii) | all liabilities, costs, expenses (including reasonable expenses of investigation and attorneys’ fees and expenses), losses, damages, assessments, settlements or judgments arising out of or incident to the imposition, assessment or assertion of any Tax liability or damage described in (i) or (ii), including those incurred in the contest in good faith in appropriate proceedings relating to the imposition, assessment or assertion of any such Tax, liability or damage. |
| (b) | Company Indemnity to Parent. Except in the case of any liabilities described in Section 14(a), the Company and each other member of the Company Group will jointly and severally indemnify Parent and the other members of the Parent Group against, and hold them harmless, without duplication, from: |
| (i) | any Tax liability allocated to the Company pursuant to Section 4; |
| (ii) | any Distribution Taxes or Tax-Related Losses, other than the portion of any Distribution Taxes or Tax-Related Losses in respect of which Parent has an indemnification obligation pursuant to Section 14(a); |
| (iii) | any Taxes of the Company (or any Subsidiary of the Company immediately prior to the Merger Effective Time) payable as a result of the Internal Reorganization; |
| (iv) | any Taxes imposed on any member of the SpinCo Group or Parent Group under Treasury Regulations Section 1.1502-6 (or similar or analogous provision of state, local or non-U.S. law) as a result of any such member being or having been a member of a Combined Group; and |
| (v) | all liabilities, costs, expenses (including reasonable expenses of investigation and attorneys’ fees and expenses), losses, damages, assessments, settlements or judgments arising out of or incident to the imposition, assessment or assertion of any Tax liability or damage described in (i), (ii), (iii) or (iv), including those incurred in the contest in good faith in appropriate proceedings relating to the imposition, assessment or assertion of any such Tax, liability or damage. |
| (c) | Discharge of Indemnity. Parent, the Company and the members of their respective Groups shall discharge their obligations under Section 14(a) or Section 14(b), respectively, by paying the relevant amount in accordance with Section 15, within 30 Business Days of demand therefor. Any such demand shall include a statement showing the amount due under Section 14(a) or Section 14(b), as the case may be. Notwithstanding the foregoing, if any member of the Parent Group or any member of the Company Group disputes in good faith the fact or the amount of its obligation under Section 14(a) or Section 14(b), then no payment of the amount in dispute shall be required until any such good faith dispute is resolved in accordance with Section 25; provided, however, that any amount not paid within 30 Business Days of demand therefor shall bear interest as provided in Section 15. |
| (d) | Tax Benefits. If an indemnification obligation of any Indemnifying Party under this Section 14 arises in respect of an adjustment that makes allowable to an Indemnified Party any offsetting deduction or other item that would reduce taxes which would not, but for such adjustment, be allowable, then any such indemnification obligation shall be an amount equal to (i) the amount otherwise due but for this Section 14(d), minus (ii) the reduction in actual cash Taxes payable by the Indemnified Party in the year such indemnification obligation arises, determined on a ‘‘with and without’’ basis. |
| (a) | Timing. All payments required to be made under this Agreement (excluding, for the avoidance of doubt, any payments to a Taxing Authority described herein) shall be made in immediately available funds. Except as otherwise provided, all such payments will be due thirty (30) Business Days after the receipt of notice of such payment or, where no notice is required, thirty (30) Business Days after the fixing of liability or the resolution of a dispute (the ‘‘Due Date’’). Payments shall be deemed made when received. Any payment that is not made on or before the Due Date shall bear interest at the rate equal to the ‘‘prime’’ rate as published on such Due Date in the Wall Street Journal, Eastern Edition, for the period from and including the date immediately following the Due Date through and including the date of payment. With respect to any payment required to be made under this Agreement, the Company and Parent have the right to designate, by written notice to the other party, which member of the designating party’s Group will make or receive such payment; provided, however, that all such payments shall be made by a Person that is a ‘‘domestic corporation’’ within the meaning of Section 7701(a) of the Code. |
| (b) | Treatment of Payments. To the extent permitted by Applicable Tax Law and except as otherwise provided herein, any payment made by the Company or any member of the Company Group to Parent or any member of the Parent Group, or by Parent or any member of the Parent Group to the Company or any member of the Company Group, pursuant to this Agreement, the Separation Agreement, the Merger Agreement or any other Transaction Agreement that relates to Taxable periods (or portions thereof) ending on or before the Distribution Date shall be treated by the parties hereto for all Tax purposes as a distribution by SpinCo to the Company, or capital contribution from the Company to SpinCo, as the case may be; provided, however, that any payment made pursuant to Section 2.05 of the Separation Agreement shall instead be treated as if the party required to make a payment of received amounts received such amounts as agent for the other party; provided, further, that any payment made pursuant to [•]10 shall instead be treated as a payment for services; and provided, further, that any |
| 10 | Note to Draft: Cross-refer to payment provisions of transition service arrangements and Ancillary Agreements. |
| (c) | No Duplicative Payment. It is intended that the provisions of this Agreement shall not result in a duplicative payment of any amount required to be paid under the Separation Agreement, the Merger Agreement or any other Transaction Agreement, and this Agreement shall be construed accordingly. |
| (a) | Consult and Cooperate. SpinCo, the Company and Parent shall consult and cooperate (and shall cause each other member of their respective Groups to consult and cooperate) fully at such time and to the extent reasonably requested by the other party in connection with all matters subject to this Agreement. Such cooperation shall include: |
| (i) | the retention, and provision on reasonable request, of any and all information including all books, records, documentation or other information pertaining to Tax matters relating to the SpinCo Group, any necessary explanations of information, and access to personnel, until one year after the expiration of the applicable statute of limitation (giving effect to any extension, waiver, or mitigation thereof); |
| (ii) | the execution of any document that may be necessary (including to give effect to Section 17) or helpful in connection with any required Tax Return or in connection with any Tax Proceeding; and |
| (iii) | the use of the parties’ commercially reasonable efforts to obtain any documentation from a Governmental Authority or a third party that may be necessary or helpful in connection with the foregoing. |
| (b) | Provide Information. Except as set forth in Section 17, the Company, SpinCo and Parent shall keep each other reasonably informed with respect to any material development relating to the matters subject to this Agreement. |
| (c) | Tax Attribute Matters. The Company, SpinCo and Parent shall promptly advise each other with respect to any proposed Tax adjustments that are the subject of a Tax Proceeding, and that may affect Structure Benefits or any Tax liability or any Tax Attribute (including, but not limited to, basis in an asset or the amount of earnings and profits) of any member of the Parent Group or any member of the Company Group, respectively. |
| (d) | Confidentiality and Privileged Information. Any information or documents provided under this Agreement shall be kept confidential by the party receiving the information or documents, except as may otherwise be necessary in connection with the filing of required Tax Returns or in connection with any audit, proceeding, suit or action. Notwithstanding any other provision of this Agreement or any other agreement, (i) no member of the Company Group or Parent Group, respectively, shall be required to provide any member of the Parent Group or Company Group, respectively, or any other Person access to or copies of any information or procedures other than information or procedures that relate solely to SpinCo, the business or assets of any member of the SpinCo Group or matters for which Parent or Company Group, respectively, has an obligation to indemnify under this Agreement, and (ii) in no event shall any member of the Company Group or the Parent Group, respectively, be required to provide any member of the Parent Group or Company Group, respectively, or any other Person access to or copies of any information if such action could reasonably be expected to result in the waiver of any privilege. Notwithstanding the foregoing, in the event that the Company or Parent, respectively, determines that the provision of any information to any member of the Parent Group or Company Group, respectively, could be commercially detrimental or violate any law or agreement to which the Company or Parent, respectively, is bound, the Company or Parent, respectively, shall not be required to comply with the foregoing terms of this Section 16(d) except to the extent that it is able, using commercially reasonable efforts, to do so while avoiding such harm or consequence. |
| (a) | Notice. Each of the Company, SpinCo and Parent shall promptly notify the other parties in writing upon the receipt from a relevant Taxing Authority of any notice of a Tax Proceeding that may give rise to an indemnification obligation under this Agreement or a change to Structure Benefits; provided that a party’s right to indemnification or with respect to Structure Benefits under this Agreement shall not be limited in any way by a failure to so notify, except to the extent that the Indemnifying Party or the counterparty with respect to Structure Benefits, as the case may be, is prejudiced by such failure. |
| (b) | Company Control. Notwithstanding anything in this Agreement to the contrary and except as otherwise provided in Section 17(d), the Company shall have the right to control any Tax Proceeding with respect to any Tax matters of (i) a Combined Group or any member of a Combined Group (as such), (ii) any member of the Company Group and (iii) any member of the SpinCo Group with respect to a Pre-Distribution Period (each, a ‘‘Company Tax Proceeding’’). The Company shall have absolute discretion with respect to any decisions to be made, or the nature of any action to be taken, with respect to any Tax matter described in the preceding sentence; provided, however, that to the extent that any Tax Proceeding relating to such a Tax matter is reasonably likely to give rise to an indemnity obligation of SpinCo or Parent under Section 14, materially increase the Taxes allocated to any member of the Parent Group pursuant to Section 4 or materially affect the Tax Attributes allocated to any member of the SpinCo Group pursuant to Section 6, the Company shall keep Parent informed of all material developments and events relating to any such Company Tax Proceeding and the Company shall not settle or compromise any such contest without Parent’s written consent, which consent may not be unreasonably withheld, conditioned or delayed. |
| (c) | Parent Assumption of Control. The Company, in its sole discretion, may permit Parent to elect to assume control of a Company Tax Proceeding at Parent’s sole cost and expense; provided, however, that Parent shall have no obligation to elect to control any Company Tax Proceeding but, if Parent so elects, it will (i) be responsible for the payment of any liability arising from the disposition of such matter notwithstanding any other provision of this Agreement to the contrary and (ii) indemnify the Company Group for any increase in a liability and any reduction of a Tax asset of the Company Group arising from such matter. |
| (d) | Consolidated Group Tax Matters. The Company, in the case of any Tax Proceeding with respect to the consolidated U.S. federal income Tax Return (or any similar state and local Tax Return filed on a group basis) of the Company Group, and Parent, in the case of any Tax Proceeding with respect to the consolidated U.S. federal income Tax Return (or any similar state and local Tax Return filed on a group basis) of the Parent Group, shall have the right to control any such Tax Proceeding relating to the Intended Tax Treatment; provided that (i) the controlling party shall keep the non-controlling party fully informed of all material developments, (ii) the non-controlling party (at its own cost) shall have the right to participate in the defense of such Tax Proceeding, and (iii) the controlling party shall not settle or compromise any such Tax Proceeding without the non-controlling party’s written consent, which consent may not be unreasonably withheld, conditioned, or delayed (in the case of clause (ii) and (iii), only if such Tax Proceeding could reasonably be expected to (A) result in an obligation under Section 13(c)(vii), Section 14(a) or Section 14(b) or (B) adversely affect the Structure Tax Assets); provided, further, that if the non-controlling party withholds its consent to a settlement or compromise, then (x) the non-controlling party shall be liable for Taxes resulting from a Final Determination to the extent the basis for the Final Determination is such that the non-controlling party would have liability, in whole or in part, under Section 13(c)(vii), Section 14(a) or Section 14(b), as applicable, as a result of such Final Determination, or (y) in the case of Distribution Taxes or Tax-Related Losses, for all of such Taxes resulting from a Final Determination if such Final Determination fails to clearly articulate the basis for liability such that it is not reasonably ascertainable which party would be liable for the Taxes under this Agreement. The Company and Parent shall use their reasonable best efforts to ensure that the Final Determination clearly provides the basis for such determination. |
| (e) | Parent Control. Parent shall have the right to control any Tax Proceeding with respect to SpinCo, or any member of the SpinCo Group, relating to one or more members of the SpinCo Group and to any Post-Distribution Period; provided, however, that to the extent any such matter may give rise to a claim |
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General Electric Company
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Attention:
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[ ]
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Telecopy:
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( ) -
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with a copy (which shall not constitute notice) to:
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Davis Polk & Wardwell LLP
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450 Lexington Avenue
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New York, New York 10017
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Attention:
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Neil Barr
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William Curran
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Telecopy:
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(212) 450-5581
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Transportation Systems Holdings Inc.
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Attention:
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[ ]
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Telecopy:
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( ) -
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with a copy (which shall not constitute notice) to:
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Transportation Systems Holdings Inc.
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Attention:
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Telecopy:
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( ) -
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and
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Davis Polk & Wardwell LLP
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450 Lexington Avenue
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New York, New York 10017
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Attention:
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Neil Barr
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William Curran
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Telecopy:
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(212) 450-5581
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Westinghouse Air Brake Technologies Corporation
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with a copy (which shall not constitute notice) to:
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Jones Day
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250 Vesey Street
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New York, New York 10281
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Attention: [ ]
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Facsimile No.: [ ]
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E-mail: [ ]
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| (a) | Entire Agreement. |
| (i) | This Agreement, the other Transaction Agreements and any other agreements contemplated hereby or thereby constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the subject matter hereof. |
| (ii) | THE PARTIES ACKNOWLEDGE AND AGREE THAT NO REPRESENTATION, WARRANTY, PROMISE, INDUCEMENT, UNDERSTANDING, COVENANT OR AGREEMENT HAS BEEN MADE OR RELIED UPON BY ANY PARTY OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN THE OTHER TRANSACTION DOCUMENTS. WITHOUT LIMITING THE GENERALITY OF THE DISCLAIMER SET FORTH IN THE PRECEDING SENTENCE, NEITHER THE COMPANY NOR ANY OF ITS AFFILIATES HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATIONS OR WARRANTIES IN ANY PRESENTATION OR WRITTEN INFORMATION RELATING TO THE SPINCO BUSINESS GIVEN OR TO BE GIVEN IN CONNECTION WITH THE CONTEMPLATED TRANSACTIONS OR IN ANY FILING MADE OR TO BE MADE BY OR ON BEHALF OF THE COMPANY OR ANY OF ITS AFFILIATES WITH ANY GOVERNMENTAL AUTHORITY, AND NO STATEMENT MADE IN ANY SUCH PRESENTATION OR WRITTEN MATERIALS, MADE IN ANY SUCH FILING OR CONTAINED IN ANY SUCH OTHER INFORMATION SHALL BE DEEMED A REPRESENTATION OR WARRANTY HEREUNDER OR OTHERWISE. SPINCO ACKNOWLEDGES THAT THE COMPANY HAS INFORMED IT THAT NO PERSON HAS BEEN AUTHORIZED BY THE COMPANY OR ANY OF ITS AFFILIATES TO MAKE ANY REPRESENTATION OR WARRANTY IN RESPECT OF THE SPINCO BUSINESS OR IN CONNECTION WITH THE CONTEMPLATED TRANSACTIONS, UNLESS IN WRITING AND CONTAINED IN THIS AGREEMENT OR IN ANY OF THE OTHER TRANSACTION DOCUMENTS TO WHICH THEY ARE A PARTY. |
| (b) | Amendments and Waivers. |
| (i) | This Agreement may be amended, and any provision of this Agreement may be waived if and only if such amendment or waiver, as the case may be, is in writing and signed, in the case of an amendment, by the parties or, in the case of a waiver, by the party against whom the waiver is to be effective. |
| (ii) | No failure or delay by either party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. Except as otherwise provided herein, no action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained in this Agreement. Any term, covenant or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but only by a written notice signed by such party expressly waiving such term, covenant or condition. The waiver by any party of a breach of any provision hereunder shall not operate or be construed as a waiver of any prior or subsequent breach of the same or any other provision hereunder. |
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The Company on its own behalf and on behalf of the members of the Company Group.
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By:
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Name:
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Title:
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SpinCo on its own behalf and on behalf of the members of the SpinCo Group.
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By:
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Name:
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Title:
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Parent on its own behalf and on behalf of the members of the Parent Group.
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By:
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Name:
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Title:
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Direct Sale Purchaser
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By:
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Name:
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Title:
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| (A) | transfer and distribution intended to qualify, taken together, as a reorganization described in Section 368(a)(1)(D) of the Code (or any analogous provision of state, local or non-U.S. tax law); |
| (B) | distribution intended to qualify as a distribution of the ‘‘controlled corporation’’ stock to the shareholders of the ‘‘distributing corporation’’ pursuant to Section 355(a) of the Code (or any analogous provision of state, local or non-U.S. tax law); |
| (C) | transfer intended to qualify as a transfer pursuant to Section 351 of the Code (or any analogous provision of state, local or non-U.S. tax law); and |
| (D) | transaction intended to qualify as the distribution of property in complete liquidation of a corporation pursuant to Section 332 of the Code (or any analogous provision of state, local or non-U.S. tax law);11 |
| 11 | Note to Draft: To be amended to add any other provision resulting in tax-free treatment under non-U.S. law. |